Equatorial Pará Distribuidora de Energia (BVMF:EQPA3) Has Gifted Shareholders With A Fantastic 120% Total Return On Their Investment

If you buy and hold a stock for many years, you'd hope to be making a profit. But more than that, you probably want to see it rise more than the market average. But Equatorial Pará Distribuidora de Energia S.A. (BVMF:EQPA3) has fallen short of that second goal, with a share price rise of 94% over five years, which is below the market return. Looking at the last year alone, the stock is up 7.3%.

See our latest analysis for Equatorial Pará Distribuidora de Energia

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Equatorial Pará Distribuidora de Energia's earnings per share are down 5.0% per year, despite strong share price performance over five years.

Essentially, it doesn't seem likely that investors are focused on EPS. 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.

On the other hand, Equatorial Pará Distribuidora de Energia's revenue is growing nicely, at a compound rate of 6.5% over the last five years. In that case, the company may be sacrificing current earnings per share to drive growth.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

If you are thinking of buying or selling Equatorial Pará Distribuidora de Energia stock, you should check out this FREE detailed report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Equatorial Pará Distribuidora de Energia's total shareholder return (TSR) and its share price return. 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. Its history of dividend payouts mean that Equatorial Pará Distribuidora de Energia's TSR of 120% over the last 5 years is better than the share price return.

A Different Perspective

It's good to see that Equatorial Pará Distribuidora de Energia has rewarded shareholders with a total shareholder return of 10% in the last twelve months. However, the TSR over five years, coming in at 17% per year, is even more impressive. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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 1 warning sign for Equatorial Pará Distribuidora de Energia you should be aware of.

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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