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Can You Imagine How Vishay Intertechnology's (NYSE:VSH) Shareholders Feel About The 85% Share Price Increase?

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·3 min read
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The main point of investing for the long term is to make money. Better yet, you'd like to see the share price move up more than the market average. But Vishay Intertechnology, Inc. (NYSE:VSH) has fallen short of that second goal, with a share price rise of 85% over five years, which is below the market return. However, more recent buyers should be happy with the increase of 47% over the last year.

See our latest analysis for Vishay Intertechnology

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the last half decade, Vishay Intertechnology became profitable. That would generally be considered a positive, so we'd expect the share price to be up. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. In fact, the Vishay Intertechnology stock price is 7.9% lower in the last three years. In the same period, EPS is up 216% per year. It would appear there's a real mismatch between the increasing EPS and the share price, which has declined -2.7% a year for three years.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
earnings-per-share-growth

It is of course excellent to see how Vishay Intertechnology has grown profits over the years, but the future is more important for shareholders. This free interactive report on Vishay Intertechnology's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Vishay Intertechnology, it has a TSR of 102% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

We're pleased to report that Vishay Intertechnology shareholders have received a total shareholder return of 50% over one year. And that does include the dividend. That's better than the annualised return of 15% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 1 warning sign for Vishay Intertechnology that you should be aware of before investing here.

Of course Vishay Intertechnology may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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 (at) simplywallst.com.