U.S. markets closed
  • S&P Futures

    3,816.00
    +6.75 (+0.18%)
     
  • Dow Futures

    30,954.00
    +42.00 (+0.14%)
     
  • Nasdaq Futures

    12,967.00
    +56.00 (+0.43%)
     
  • Russell 2000 Futures

    2,200.00
    +0.80 (+0.04%)
     
  • Crude Oil

    62.07
    +0.57 (+0.93%)
     
  • Gold

    1,734.30
    +5.50 (+0.32%)
     
  • Silver

    26.74
    +0.30 (+1.13%)
     
  • EUR/USD

    1.2089
    -0.0097 (-0.80%)
     
  • 10-Yr Bond

    1.4600
    -0.0580 (-3.82%)
     
  • Vix

    27.95
    -0.94 (-3.25%)
     
  • GBP/USD

    1.3959
    -0.0054 (-0.39%)
     
  • USD/JPY

    106.5020
    +0.2720 (+0.26%)
     
  • BTC-USD

    45,923.01
    -911.44 (-1.95%)
     
  • CMC Crypto 200

    912.88
    -20.25 (-2.17%)
     
  • FTSE 100

    6,483.43
    -168.53 (-2.53%)
     
  • Nikkei 225

    28,966.01
    -1,202.29 (-3.99%)
     

Simonds Group (ASX:SIO) Shareholders Booked A 78% Gain In The Last Three Years

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the Simonds Group Limited (ASX:SIO) share price is up 78% in the last three years, clearly besting the market return of around 16% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 49% in the last year.

Check out our latest analysis for Simonds Group

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 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.

Simonds Group was able to grow its EPS at 51% per year over three years, sending the share price higher. This EPS growth is higher than the 21% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat. This cautious sentiment is reflected in its (fairly low) P/E ratio of 11.32.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Simonds Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Simonds Group has rewarded shareholders with a total shareholder return of 49% in the last twelve months. That's better than the annualised return of 8% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Simonds Group better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Simonds Group , and understanding them should be part of your investment process.

Simonds Group is not the only stock that insiders are buying. 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 AU exchanges.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.