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If You Had Bought T&G Global (NZSE:TGG) Stock Five Years Ago, You Could Pocket A 40% Gain Today

Simply Wall St

The main point of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. But T&G Global Limited (NZSE:TGG) has fallen short of that second goal, with a share price rise of 40% over five years, which is below the market return. Looking at the last year alone, the stock is up 5.3%.

Check out our latest analysis for T&G Global

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, T&G Global actually saw its EPS drop 13% per year.

This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

In contrast revenue growth of 11% per year is probably viewed as evidence that T&G Global is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

Take a more thorough look at T&G Global's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered T&G Global's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that T&G Global's TSR of 56% over the last 5 years is better than the share price return.

A Different Perspective

We're pleased to report that T&G Global shareholders have received a total shareholder return of 5.3% over one year. However, that falls short of the 9.3% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for T&G Global (of which 2 are a bit concerning!) you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NZ exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.