Dubai Financial Market (DFM) P.J.S.C (DFM:DFM) Shareholders Booked A 47% Gain In The Last Year

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Dubai Financial Market (DFM) P.J.S.C (DFM:DFM) share price is up 47% in the last year, clearly besting the market return of around 29% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 0.9% in the last three years.

View our latest analysis for Dubai Financial Market (DFM) P.J.S.C

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Dubai Financial Market (DFM) P.J.S.C was able to grow EPS by 14% in the last twelve months. This EPS growth is significantly lower than the 47% increase in the share price. This indicates that the market is now more optimistic about the stock. The fairly generous P/E ratio of 62.04 also points to this optimism.

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

We know that Dubai Financial Market (DFM) P.J.S.C has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Dubai Financial Market (DFM) P.J.S.C will grow revenue in the future.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Dubai Financial Market (DFM) P.J.S.C's total shareholder return (TSR) and its share price change, which we've covered above. 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. Dubai Financial Market (DFM) P.J.S.C's TSR of 54% for the year exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that Dubai Financial Market (DFM) P.J.S.C shareholders have received a total shareholder return of 54% over the last year. There's no doubt those recent returns are much better than the TSR loss of 2% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Before deciding if you like the current share price, check how Dubai Financial Market (DFM) P.J.S.C scores on these 3 valuation metrics.

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 AE 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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