Koninklijke BAM Groep nv (AMS:BAMNB) shareholders will doubtless be very grateful to see the share price up 32% in the last quarter. But over the last half decade, the stock has not performed well. You would have done a lot better buying an index fund, since the stock has dropped 16% in that half decade.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).
Looking back five years, both Koninklijke BAM Groep’s share price and EPS declined; the latter at a rate of 11% per year. This fall in the EPS is worse than the 3.5% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Koninklijke BAM Groep has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any 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. As it happens, Koninklijke BAM Groep’s TSR for the last 5 years was -11%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Koninklijke BAM Groep shareholders have received returns of 7.3% over twelve months (even including dividends), which isn’t far from the general market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 2.3%, which was endured over half a decade. We’re pretty skeptical of turnaround stories, but it’s good to see the recent share price recovery. Importantly, we haven’t analysed Koninklijke BAM Groep’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.
We will like Koninklijke BAM Groep better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NL exchanges.
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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.