Buying shares in the best businesses can build meaningful wealth for you and your family. And we’ve seen some truly amazing gains over the years. Just think about the savvy investors who held Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt. (BUSE:BIF) shares for the last five years, while they gained 831%. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 29% in about a quarter.
It really delights us to see such great share price performance for investors.
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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.
Over half a decade, Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt managed to grow its earnings per share at 80% a year. This EPS growth is higher than the 56% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.29.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt’s key metrics by checking this interactive graph of Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt’s earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt’s TSR for the last 5 years was 910%, 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 good to see that Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt has rewarded shareholders with a total shareholder return of 70% in the last twelve months. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 59% per year), it would seem that the stock’s performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before forming an opinion on Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.
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 HU 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 email@example.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.