Did Ascencio’s (EBR:ASC) Share Price Deserve to Gain 11%?

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The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the Ascencio SCA (EBR:ASC) share price is 11% higher than it was a year ago, much better than the market return of around -7.9% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! On the other hand, longer term shareholders have had a tougher run, with the stock falling 5.8% in three years.

View our latest analysis for Ascencio

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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 the last year, Ascencio actually saw its earnings per share drop 24%. So we don’t think that investors are paying too much attention to EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We note that the most recent dividend payment is higher than the payment a year ago, so that may have assisted the share price. Income-seeking investors probably helped bid up the stock price.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

ENXTBR:ASC Income Statement, June 13th 2019
ENXTBR:ASC Income Statement, June 13th 2019

This free interactive report on Ascencio’s balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Ascencio’s TSR for the last year was 17%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

We’re pleased to report that Ascencio shareholders have received a total shareholder return of 17% over one year. And that does include the dividend. That gain is better than the annual TSR over five years, which is 5.6%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Importantly, we haven’t analysed Ascencio’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.

We will like Ascencio better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BE 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.