Did You Miss Accor's (EPA:AC) 18% Share Price Gain?

Buying a low-cost index fund will get you the average market return. But across the board there are plenty of stocks that underperform the market. For example, the Accor SA (EPA:AC) share price return of 18% over three years lags the market return in the same period. Zooming in, the stock is actually down 2.2% in the last year.

View our latest analysis for Accor

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.

Accor was able to grow its EPS at 69% per year over three years, sending the share price higher. This EPS growth is higher than the 5.6% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. Having said that, the market is still optimistic, given the P/E ratio of 56.66.

The image below shows how EPS has tracked over time.

We know that Accor has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

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. We note that for Accor the TSR over the last 3 years was 27%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Accor provided a TSR of 0.7% over the last twelve months. But that was short of the market average. 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 3.5% over five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. Is Accor cheap compared to other companies? These 3 valuation measures might help you decide.

But note: Accor may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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.

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. Thank you for reading.