If You Had Bought CEZ Distribution Bulgaria AD (BUL:3CZ) Stock Five Years Ago, You Could Pocket A 71% Gain Today

When we invest, we're generally looking for stocks that outperform the market average. Buying under-rated businesses is one path to excess returns. To wit, the CEZ Distribution Bulgaria AD share price has climbed 71% in five years, easily topping the market return of 12% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 5.5%.

View our latest analysis for CEZ Distribution Bulgaria AD

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, CEZ Distribution Bulgaria AD achieved compound earnings per share (EPS) growth of 24% per year. This EPS growth is higher than the 11% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. The reasonably low P/E ratio of 10.25 also suggests market apprehension.

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

Dive deeper into CEZ Distribution Bulgaria AD's key metrics by checking this interactive graph of CEZ Distribution Bulgaria AD's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered CEZ Distribution Bulgaria AD's 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. Dividends have been really beneficial for CEZ Distribution Bulgaria AD shareholders, and that cash payout contributed to why its TSR of 89%, over the last 5 years, is better than the share price return.

A Different Perspective

It's nice to see that CEZ Distribution Bulgaria AD shareholders have received a total shareholder return of 5.5% over the last year. However, that falls short of the 14% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. Before deciding if you like the current share price, check how CEZ Distribution Bulgaria AD scores on these 3 valuation metrics.

But note: CEZ Distribution Bulgaria AD may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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