Does Hansen Technologies' (ASX:HSN) Share Price Gain of 66% Match Its Business Performance?

By
Simply Wall St
Published
May 17, 2021
ASX:HSN
Source: Shutterstock

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the Hansen Technologies Limited (ASX:HSN) share price is 66% higher than it was a year ago, much better than the market return of around 35% (not including dividends) in the same period. That's a solid performance by our standards! The longer term returns have not been as good, with the stock price only 16% higher than it was three years ago.

View our latest analysis for Hansen Technologies

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Hansen Technologies was able to grow EPS by 140% in the last twelve months. It's fair to say that the share price gain of 66% did not keep pace with the EPS growth. So it seems like the market has cooled on Hansen Technologies, despite the growth. Interesting.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
ASX:HSN Earnings Per Share Growth May 18th 2021

We know that Hansen Technologies has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Hansen Technologies will grow revenue in the future.

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Hansen Technologies, it has a TSR of 71% for the last year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Hansen Technologies shareholders have received a total shareholder return of 71% over the last year. Of course, that includes the dividend. That's better than the annualised return of 10% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Hansen Technologies has 2 warning signs (and 1 which is concerning) we think you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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