Those who invested in Empresa Eléctrica Pehuenche (SNSE:PEHUENCHE) a year ago are up 147%

When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Empresa Eléctrica Pehuenche S.A. (SNSE:PEHUENCHE) share price had more than doubled in just one year - up 108%. On top of that, the share price is up 22% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. It is also impressive that the stock is up 52% over three years, adding to the sense that it is a real winner.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for Empresa Eléctrica Pehuenche

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 Empresa Eléctrica Pehuenche grew its earnings per share (EPS) by 20%. This EPS growth is significantly lower than the 108% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into Empresa Eléctrica Pehuenche's key metrics by checking this interactive graph of Empresa Eléctrica Pehuenche's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Empresa Eléctrica Pehuenche, it has a TSR of 147% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Empresa Eléctrica Pehuenche has rewarded shareholders with a total shareholder return of 147% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 8% 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. It's always interesting to track share price performance over the longer term. But to understand Empresa Eléctrica Pehuenche better, we need to consider many other factors. For example, we've discovered 1 warning sign for Empresa Eléctrica Pehuenche that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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