Did You Participate In Any Of Construtora Tenda's (BVMF:TEND3) Incredible 365% Return?

Investing can be hard but the potential fo an individual stock to pay off big time inspires us. But when you hold the right stock for the right time period, the rewards can be truly huge. One such superstar is Construtora Tenda S.A. (BVMF:TEND3), which saw its share price soar 343% in three years. Also pleasing for shareholders was the 54% gain in the last three months. But this could be related to the strong market, which is up 23% in the last three months.

See our latest analysis for Construtora Tenda

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.

Construtora Tenda was able to grow its EPS at 54% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 64% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Quite to the contrary, the share price has arguably reflected the EPS growth.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Construtora Tenda has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Construtora Tenda'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). 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. As it happens, Construtora Tenda's TSR for the last 3 years was 365%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Pleasingly, Construtora Tenda's total shareholder return last year was 40%. And yes, that does include the dividend. The TSR has been even better over three years, coming in at 67% per year. It's always interesting to track share price performance over the longer term. But to understand Construtora Tenda better, we need to consider many other factors. Take risks, for example - Construtora Tenda has 5 warning signs (and 2 which don't sit too well with us) we think you should know about.

Of course Construtora Tenda may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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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. 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.
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