These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. For example, the SpareBank 1 Østlandet (OB:SPOL) share price is up 14% in the last year, clearly besting the market return of around 8.2% (not including dividends). So that should have shareholders smiling. SpareBank 1 Østlandet hasn’t been listed for long, so it’s still not clear if it is a long term winner.
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
During the last year SpareBank 1 Østlandet grew its earnings per share (EPS) by 27%. It’s fair to say that the share price gain of 14% did not keep pace with the EPS growth. So it seems like the market has cooled on SpareBank 1 Østlandet, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.15.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of SpareBank 1 Østlandet, it has a TSR of 19% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
SpareBank 1 Østlandet shareholders should be happy with the total gain of 19% over the last twelve months , including dividends . And the share price momentum remains respectable, with a gain of 11% in the last three months. This suggests the company is continuing to win over new investors. 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. For example, we’ve discovered 3 warning signs for SpareBank 1 Østlandet (of which 1 is major) which any shareholder or potential investor should be aware of.
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 NO exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.