Chocoladefabriken Lindt & Sprüngli (VTX:LISN) Shareholders Have Enjoyed A 27% Share Price Gain

By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the Chocoladefabriken Lindt & Sprüngli AG (VTX:LISN) share price is up 27% in the last three years, clearly besting the market return of around 12% (not including dividends).

See our latest analysis for Chocoladefabriken Lindt & Sprüngli

There is no denying that markets are sometimes efficient, but prices do not always reflect 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 three years of share price growth, Chocoladefabriken Lindt & Sprüngli achieved compound earnings per share growth of 1.2% per year. In comparison, the 8% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. That's not necessarily surprising considering the three-year track record of earnings growth. This optimism is also reflected in the fairly generous P/E ratio of 45.95.

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

Dive deeper into Chocoladefabriken Lindt & Sprüngli's key metrics by checking this interactive graph of Chocoladefabriken Lindt & Sprüngli's earnings, revenue and cash flow.

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Chocoladefabriken Lindt & Sprüngli the TSR over the last 3 years was 33%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Chocoladefabriken Lindt & Sprüngli shareholders are down 5.5% for the year (even including dividends), but the market itself is up 2.1%. 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. Longer term investors wouldn't be so upset, since they would have made 6%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before forming an opinion on Chocoladefabriken Lindt & Sprüngli you might want to consider these 3 valuation metrics.

We will like Chocoladefabriken Lindt & Sprüngli better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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