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SW Umwelttechnik Stoiser & Wolschner AG (VIE:SWUT) shareholders might be concerned after seeing the share price drop 15% in the last quarter. But that doesn’t change the fact that shareholders have received really good returns over the last five years. We think most investors would be happy with the 156% return, over that period. So while it’s never fun to see a share price fall, it’s important to look at a longer time horizon. Ultimately business performance will determine whether the stock price continues the positive long term trend.
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. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During the last half decade, SW Umwelttechnik Stoiser & Wolschner became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Since the company was unprofitable five years ago, but not three years ago, it’s worth taking a look at the returns in the last three years, too. We can see that the SW Umwelttechnik Stoiser & Wolschner share price is up 129% in the last three years. During the same period, EPS grew by 125% each year. This EPS growth is higher than the 32% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 2.25.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Dive deeper into SW Umwelttechnik Stoiser & Wolschner’s key metrics by checking this interactive graph of SW Umwelttechnik Stoiser & Wolschner’s earnings, revenue and cash flow.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for SW Umwelttechnik Stoiser & Wolschner the TSR over the last 5 years was 163%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It’s good to see that SW Umwelttechnik Stoiser & Wolschner has rewarded shareholders with a total shareholder return of 63% in the last twelve months. That’s including the dividend. That’s better than the annualised return of 21% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. You could get a better understanding of SW Umwelttechnik Stoiser & Wolschner’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course SW Umwelttechnik Stoiser & Wolschner 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 AT exchanges.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.