A diverse portfolio of stocks will always have winners and losers. But the goal is to pick stocks that do better than average. SPIE SA (EPA:SPIE) has done well over the last year, with the stock price up 27% beating the market return of 24% (not including dividends). In contrast, the longer term returns are negative, since the share price is 18% lower than it was three years ago.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 year SPIE grew its earnings per share (EPS) by 120%. It's fair to say that the share price gain of 27% did not keep pace with the EPS growth. So it seems like the market has cooled on SPIE, despite the growth. Interesting.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that SPIE has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for SPIE the TSR over the last year was 32%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
SPIE shareholders have gained 32% over twelve months (even including dividends) . This isn't far from the market return of 29%. Shareholders can take comfort that it's certainly better than the yearly loss of about 3.4% per year endured over the last three years. It could well be that the business is getting back on track. It's always interesting to track share price performance over the longer term. But to understand SPIE better, we need to consider many other factors. Take risks, for example - SPIE has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
But note: SPIE may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FR exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
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. Thank you for reading.