Multiplan Empreendimentos Imobiliários' (BVMF:MULT3) five-year earnings growth trails the 7.2% YoY shareholder returns

The main point of investing for the long term is to make money. But more than that, you probably want to see it rise more than the market average. But Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) has fallen short of that second goal, with a share price rise of 20% over five years, which is below the market return. The last year hasn't been great either, with the stock up just 4.8%.

Since it's been a strong week for Multiplan Empreendimentos Imobiliários shareholders, let's have a look at trend of the longer term fundamentals.

We've discovered 3 warning signs about Multiplan Empreendimentos Imobiliários. View them for free.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Over half a decade, Multiplan Empreendimentos Imobiliários managed to grow its earnings per share at 28% a year. This EPS growth is higher than the 4% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.16.

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

We know that Multiplan Empreendimentos Imobiliários has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Multiplan Empreendimentos Imobiliários' financial health with this free report on its balance sheet.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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 Multiplan Empreendimentos Imobiliários the TSR over the last 5 years was 42%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Multiplan Empreendimentos Imobiliários shareholders have received a total shareholder return of 10% over the last year. That's including the dividend. That's better than the annualised return of 7% 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. Case in point: We've spotted 3 warning signs for Multiplan Empreendimentos Imobiliários you should be aware of, and 1 of them is potentially serious.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.