Stock Analysis

Energiekontor (ETR:EKT) jumps 7.7% this week, though earnings growth is still tracking behind five-year shareholder returns

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XTRA:EKT
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Long term investing can be life changing when you buy and hold the truly great businesses. And we've seen some truly amazing gains over the years. Don't believe it? Then look at the Energiekontor AG (ETR:EKT) share price. It's 477% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. Better yet, the share price has risen 7.7% in the last week.

Since it's been a strong week for Energiekontor shareholders, let's have a look at trend of the longer term fundamentals.

Before we look at the performance, you might like to know that our analysis indicates that EKT is potentially overvalued!

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.

Over half a decade, Energiekontor managed to grow its earnings per share at 10% a year. This EPS growth is lower than the 42% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

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

earnings-per-share-growth
XTRA:EKT Earnings Per Share Growth October 1st 2022

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

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 Energiekontor the TSR over the last 5 years was 546%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Energiekontor has rewarded shareholders with a total shareholder return of 37% in the last twelve months. That's including the dividend. However, that falls short of the 45% TSR per annum it has made for shareholders, each year, over five years. 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 instance, we've identified 2 warning signs for Energiekontor that you should be aware of.

Of course Energiekontor may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

Valuation is complex, but we're helping make it simple.

Find out whether Energiekontor is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About XTRA:EKT

Energiekontor

Energiekontor AG, a project developer, engages in the planning, construction, and operation of wind farms and solar parks in England, Scotland, Portugal, the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation1
Future Growth3
Past Performance5
Financial Health3
Dividends1

Read more about these checks in the individual report sections or in our analysis model.

Solid track record with moderate growth potential.