National Tyre & Wheel (ASX:NTD) Shareholders Have Enjoyed An Impressive 160% Share Price Gain

Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the National Tyre & Wheel Limited (ASX:NTD) share price has soared 160% in the last year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 24% over the last quarter. On the other hand, longer term shareholders have had a tougher run, with the stock falling 12% in three years.

Check out our latest analysis for National Tyre & Wheel

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 year, National Tyre & Wheel actually saw its earnings per share drop 29%.

This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Unfortunately National Tyre & Wheel's fell 5.6% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on National Tyre & Wheel's balance sheet strength is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between National Tyre & Wheel's total shareholder return (TSR) and its share price return. 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. Its history of dividend payouts mean that National Tyre & Wheel's TSR of 169% over the last year is better than the share price return.

A Different Perspective

It's nice to see that National Tyre & Wheel shareholders have gained 169% (in total) over the last year. That's better than the annualized TSR of 1.8% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for National Tyre & Wheel that you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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