U.S. markets open in 1 hour 28 minutes
  • S&P Futures

    4,139.75
    +21.75 (+0.53%)
     
  • Dow Futures

    33,786.00
    +162.00 (+0.48%)
     
  • Nasdaq Futures

    13,903.25
    +104.50 (+0.76%)
     
  • Russell 2000 Futures

    2,268.80
    +23.80 (+1.06%)
     
  • Crude Oil

    62.98
    -0.17 (-0.27%)
     
  • Gold

    1,745.10
    +8.80 (+0.51%)
     
  • Silver

    25.51
    -0.01 (-0.05%)
     
  • EUR/USD

    1.1969
    -0.0014 (-0.12%)
     
  • 10-Yr Bond

    1.6380
    0.0000 (0.00%)
     
  • Vix

    16.79
    +0.14 (+0.84%)
     
  • GBP/USD

    1.3794
    +0.0013 (+0.10%)
     
  • USD/JPY

    108.7610
    -0.1660 (-0.15%)
     
  • BTC-USD

    62,494.49
    -1,789.38 (-2.78%)
     
  • CMC Crypto 200

    1,363.59
    -12.19 (-0.89%)
     
  • FTSE 100

    6,968.09
    +28.51 (+0.41%)
     
  • Nikkei 225

    29,642.69
    +21.70 (+0.07%)
     

Shareholders Are Thrilled That The Grange Resources (ASX:GRR) Share Price Increased 173%

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
  • Oops!
    Something went wrong.
    Please try again later.

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

The Grange Resources Limited (ASX:GRR) share price has had a bad week, falling 13%. In contrast, the return over three years has been impressive. The share price marched upwards over that time, and is now 173% higher than it was. After a run like that some may not be surprised to see prices moderate. If the business can perform well for years to come, then the recent drop could be an opportunity.

View our latest analysis for Grange Resources

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 three years of share price growth, Grange Resources moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

ASX:GRR Past and Future Earnings, May 3rd 2019
ASX:GRR Past and Future Earnings, May 3rd 2019

This free interactive report on Grange Resources's 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. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Grange Resources the TSR over the last 3 years was 235%, 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

It's good to see that Grange Resources has rewarded shareholders with a total shareholder return of 60% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 10%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. If you would like to research Grange Resources in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

Of course Grange Resources may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.