Shareholders Of EcoRodovias Infraestrutura e Logística (BVMF:ECOR3) Must Be Happy With Their 214% Total Return

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3) stock is up an impressive 172% over the last five years. It's down 3.4% in the last seven days.

See our latest analysis for EcoRodovias Infraestrutura e Logística

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

During the five years of share price growth, EcoRodovias Infraestrutura e Logística moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that EcoRodovias Infraestrutura e Logística has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between EcoRodovias Infraestrutura e Logística's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for EcoRodovias Infraestrutura e Logística shareholders, and that cash payout contributed to why its TSR of 214%, over the last 5 years, is better than the share price return.

A Different Perspective

EcoRodovias Infraestrutura e Logística shareholders are down 31% for the year, but the market itself is up 6.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 26% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. For example, we've discovered 1 warning sign for EcoRodovias Infraestrutura e Logística that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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