Did You Participate In Any Of EZTEC Empreendimentos e Participações' (BVMF:EZTC3) Incredible 392% Return?

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of EZTEC Empreendimentos e Participações S.A. (BVMF:EZTC3) stock is up an impressive 276% over the last five years. Also pleasing for shareholders was the 58% gain in the last three months. But this could be related to the strong market, which is up 34% in the last three months.

View our latest analysis for EZTEC Empreendimentos e Participações

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, EZTEC Empreendimentos e Participações actually saw its EPS drop 8.0% per year.

Essentially, it doesn't seem likely that investors are focused on EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

It is not great to see that revenue has dropped by 5.4% per year over five years. It certainly surprises us that the share price is up, but perhaps a closer examination of the data will yield answers.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We know that EZTEC Empreendimentos e Participações has improved its bottom line lately, but what does the future have in store? So we recommend checking out this free report showing consensus forecasts

What about the Total Shareholder Return (TSR)?

We've already covered EZTEC Empreendimentos e Participações' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for EZTEC Empreendimentos e Participações shareholders, and that cash payout contributed to why its TSR of 392%, over the last 5 years, is better than the share price return.

A Different Perspective

We're pleased to report that EZTEC Empreendimentos e Participações shareholders have received a total shareholder return of 12% over one year. Having said that, the five-year TSR of 38% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with EZTEC Empreendimentos e Participações , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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