Is Xilinx’s (NASDAQ:XLNX) Share Price Gain Of 100% Well Earned?

It hasn’t been the best quarter for Xilinx, Inc. (NASDAQ:XLNX) shareholders, since the share price has fallen 13% in that time. But that scarcely detracts from the really solid long term returns generated by the company over five years. Indeed, the share price is up an impressive 100% in that time. So while it’s never fun to see a share price fall, it’s important to look at a longer time horizon. Of course, that doesn’t necessarily mean it’s cheap now.

See our latest analysis for Xilinx

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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, Xilinx achieved compound earnings per share (EPS) growth of 8.3% per year. This EPS growth is lower than the 15% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That’s not necessarily surprising considering the five-year track record of earnings growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

NasdaqGS:XLNX Past and Future Earnings, November 21st 2019
NasdaqGS:XLNX Past and Future Earnings, November 21st 2019

We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Xilinx the TSR over the last 5 years was 123%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Xilinx shareholders gained a total return of 6.7% during the year. 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 17% over five years. It’s quite possible the business continues to execute with prowess, even as the share price gains are slowing. Before spending more time on Xilinx it might be wise to click here to see if insiders have been buying or selling shares.

But note: Xilinx 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 US 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.