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Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the CD Projekt S.A. (WSE:CDR) share price has soared 1409% over five years. And this is just one example of the epic gains achieved by some long term investors. Also pleasing for shareholders was the 21% gain in the last three months.
It really delights us to see such great share price performance for investors.
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...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over half a decade, CD Projekt managed to grow its earnings per share at 49% a year. This EPS growth is slower than the share price growth of 72% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 189.02.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on CD Projekt's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Dividend Lost
The value of past dividends are accounted for in the total shareholder return (TSR), but not in the share price return mentioned above. Many would argue the TSR gives a more complete picture of the value a stock brings to its holders. CD Projekt's TSR over the last 5 years is 1431%; better than its share price return. Even though the company isn't paying dividends at the moment, it has done in the past.
A Different Perspective
We're pleased to report that CD Projekt shareholders have received a total shareholder return of 48% over one year. However, that falls short of the 73% 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on PL exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.