We think all investors should try to buy and hold high quality multi-year winners. While the best companies are hard to find, but they can generate massive returns over long periods. Don’t believe it? Then look at the Hypoport AG (FRA:HYQ) share price. It’s 1479% higher than it was five years ago. If that doesn’t get you thinking about long term investing, we don’t know what will. It’s also good to see the share price up 10% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
Anyone who held for that rewarding ride would probably be keen to talk about it.
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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 five years of share price growth, Hypoport achieved compound earnings per share (EPS) growth of 34% per year. This EPS growth is slower than the share price growth of 74% per year, over the same period. So it’s fair to assume the market has a higher opinion of the business than it did five years ago. That’s not necessarily surprising considering the five-year track record of earnings growth. This optimism is visible in its fairly high P/E ratio of 52.73.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
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. Dive deeper into the earnings by checking this interactive graph of Hypoport’s earnings, revenue and cash flow.
A Different Perspective
It’s nice to see that Hypoport shareholders have received a total shareholder return of 28% over the last year. Having said that, the five-year TSR of 74% a year, is even better. Potential buyers might understandably feel they’ve missed the opportunity, but it’s always possible business is still firing on all cylinders. Before deciding if you like the current share price, check how Hypoport scores on these 3 valuation metrics.
We will like Hypoport 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 DE exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.