Yahoo Finance Those who invested in Vishay Intertechnology (NYSE:VSH) five years ago are up 50%
If you buy and hold a stock for many years, you'd hope to be making a profit. Better yet, you'd like to see the share price move up more than the market average. But Vishay Intertechnology, Inc. (NYSE:VSH) has fallen short of that second goal, with a share price rise of 37% over five years, which is below the market return. Zooming in, the stock is up a respectable 6.3% in the last year.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Vishay Intertechnology
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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 the last half decade, Vishay Intertechnology became profitable. That would generally be considered a positive, so we'd expect the share price to be up. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Vishay Intertechnology share price is up 28% in the last three years. Meanwhile, EPS is up 66% per year. This EPS growth is higher than the 9% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.75.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Vishay Intertechnology 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 Vishay Intertechnology stock, you should check out this FREE detailed 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). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Vishay Intertechnology the TSR over the last 5 years was 50%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Vishay Intertechnology shareholders are up 8.1% for the year (even including dividends). But that return falls short of the market. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 8% over five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Vishay Intertechnology better, we need to consider many other factors. For instance, we've identified 1 warning sign for Vishay Intertechnology that you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.
