NACCO Industries' (NYSE:NC) 220% YoY earnings expansion surpassed the shareholder returns over the past year
Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the NACCO Industries, Inc. (NYSE:NC) share price has soared 115% in the last 1 year. Most would be very happy with that, especially in just one year! It's also up 62% in about a month. However, the stock hasn't done so well in the longer term, with the stock only up 18% in three years.
Since the stock has added US$40m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Check out our latest analysis for NACCO Industries
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. 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).
During the last year NACCO Industries grew its earnings per share (EPS) by 220%. This EPS growth is significantly higher than the 115% increase in the share price. So it seems like the market has cooled on NACCO Industries, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 5.79.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on NACCO Industries' earnings, revenue and cash flow 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. 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. In the case of NACCO Industries, it has a TSR of 121% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
We're pleased to report that NACCO Industries shareholders have received a total shareholder return of 121% over one year. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 3% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 4 warning signs for NACCO Industries that you should be aware of before investing here.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
