Yahoo Finance If You Had Bought Arvida Group Shares Three Years Ago You’d Have Made 40%
By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, Arvida Group Limited (NZSE:ARV) shareholders have seen the share price rise 40% over three years, well in excess of the market return (25%, not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 12% in the last year, including dividends.
Check out our latest analysis for Arvida Group
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 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.
During three years of share price growth, Arvida Group achieved compound earnings per share growth of 46% per year. The average annual share price increase of 12% is actually lower than the EPS growth. 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 7.19.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Arvida Group has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Arvida Group stock, you should check out this FREE detailed report on its balance sheet.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Arvida Group, it has a TSR of 67% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Arvida Group shareholders have gained 12% over twelve months (even including dividends). This isn’t far from the market return of 12%. Notably, the longer term shareholders are better off with their TSR of 19% per year over the last three years. Share price gains are anything but steady, so it’s a positive to see that the longer term returns are reasonable. Importantly, we haven’t analysed Arvida Group’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NZ 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.
