Investors in MEG Energy (TSE:MEG) have made a stellar return of 259% over the past year

By
Simply Wall St
Published
November 10, 2021
TSX:MEG
Source: Shutterstock

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the MEG Energy Corp. (TSE:MEG) share price has soared 259% return in just a single year. Also pleasing for shareholders was the 41% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. However, the stock hasn't done so well in the longer term, with the stock only up 20% in three years.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for MEG Energy

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the last year MEG Energy grew its earnings per share, moving from a loss to a profit.

We think the growth looks very prospective, so we're not surprised the market liked it too. Inflection points like this can be a great time to take a closer look at a company.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
TSX:MEG Earnings Per Share Growth November 11th 2021

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on MEG Energy's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that MEG Energy shareholders have received a total shareholder return of 259% over the last year. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand MEG Energy better, we need to consider many other factors. Even so, be aware that MEG Energy is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

MEG Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

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