Yahoo Finance Should Stride Stapled Group (NZSE:SPG) Be Disappointed With Their 27% Profit?
Investors can buy low cost index fund if they want to receive the average market return. But across the board there are plenty of stocks that underperform the market. Unfortunately for shareholders, while the Stride Stapled Group (NZSE:SPG) share price is up 27% in the last three years, that falls short of the market return. On the other hand, the more recent gain of 25% over a year is certainly pleasing.
Check out our latest analysis for Stride Stapled 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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over the last three years, Stride Stapled Group failed to grow earnings per share, which fell 8.3% (annualized).
This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
We doubt the dividend payments explain the share price rise, since we don't see any improvement in that regard. But it's far more plausible that the revenue growth of 12% per year is viewed as evidence that Stride Stapled Group is growing. In that case, the revenue growth might be more important to shareholders, for now, thus justifying a higer share price.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Stride Stapled Group's balance sheet strength 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 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. As it happens, Stride Stapled Group's TSR for the last 3 years was 51%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It's nice to see that Stride Stapled Group shareholders have gained 32% (in total) over the last year. That's including the dividend. That's better than the annualized TSR of 15% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. Importantly, we haven't analysed Stride Stapled Group's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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.
