Shareholders of Mineral Commodities (ASX:MRC) Must Be Delighted With Their 437% Total Return

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is Mineral Commodities Ltd (ASX:MRC) which saw its share price drive 277% higher over five years. Also pleasing for shareholders was the 24% gain in the last three months. But this move may well have been assisted by the reasonably buoyant market (up 10% in 90 days).

Check out our latest analysis for Mineral Commodities

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 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 five years of share price growth, Mineral Commodities actually saw its EPS drop 9.4% per year.

Essentially, it doesn't seem likely that investors are focused on EPS. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.

In contrast revenue growth of 8.6% per year is probably viewed as evidence that Mineral Commodities is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.

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

Take a more thorough look at Mineral Commodities' financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered Mineral Commodities' 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. Mineral Commodities' TSR of 437% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

It's nice to see that Mineral Commodities shareholders have received a total shareholder return of 48% over the last year. That gain is better than the annual TSR over five years, which is 40%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Mineral Commodities better, we need to consider many other factors. For example, we've discovered 4 warning signs for Mineral Commodities (2 shouldn't be ignored!) that you should be aware of before investing here.

We will like Mineral Commodities better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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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