Investing in Learning Technologies Group (LON:LTG) five years ago would have delivered you a 317% gain
We think all investors should try to buy and hold high quality multi-year winners. While the best companies are hard to find, but they can generate massive returns over long periods. For example, the Learning Technologies Group plc (LON:LTG) share price is up a whopping 307% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. It's also up 10% in about a month.
So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.
View our latest analysis for Learning Technologies Group
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over half a decade, Learning Technologies Group managed to grow its earnings per share at 166% a year. This EPS growth is higher than the 32% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. Of course, with a P/E ratio of 76.83, the market remains optimistic.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Learning Technologies Group the TSR over the last 5 years was 317%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Learning Technologies Group shareholders gained a total return of 1.2% during the year. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 33% per year for five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Learning Technologies Group better, we need to consider many other factors. For instance, we've identified 2 warning signs for Learning Technologies Group that you should be aware of.
Learning Technologies Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
