Scout24's (ETR:G24) five-year earnings growth trails the notable shareholder returns
When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, long term Scout24 SE (ETR:G24) shareholders have enjoyed a 39% share price rise over the last half decade, well in excess of the market decline of around 6.8% (not including dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 6.6% , including dividends .
Since the stock has added €138m 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 Scout24
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, Scout24 achieved compound earnings per share (EPS) growth of 12% per year. The EPS growth is more impressive than the yearly share price gain of 7% over the same period. Therefore, it seems the market has become relatively pessimistic about the company.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Scout24 has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Scout24's financial health with this free report on its balance sheet.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Scout24, it has a TSR of 48% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that Scout24 has rewarded shareholders with a total shareholder return of 6.6% in the last twelve months. And that does include the dividend. However, the TSR over five years, coming in at 8% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Scout24 better, we need to consider many other factors. Take risks, for example - Scout24 has 1 warning sign we think you should be aware of.
But note: Scout24 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 German exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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