Introducing IBU-tec advanced materials (ETR:IBU), A Stock That Climbed 62% In The Last Year

Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the IBU-tec advanced materials AG (ETR:IBU) share price is up 62% in the last year, clearly besting the market return of around 1.0% (not including dividends). That's a solid performance by our standards! And shareholders have also done well over the long term, with an increase of 44% in the last three years.

View our latest analysis for IBU-tec advanced materials

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year, IBU-tec advanced materials actually saw its earnings per share drop 12%.

Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We doubt the modest 0.6% dividend yield is doing much to support the share price. Unfortunately IBU-tec advanced materials' fell 32% over twelve months. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at IBU-tec advanced materials' financial health with this free report on its balance sheet.

A Different Perspective

Pleasingly, IBU-tec advanced materials' total shareholder return last year was 62%. That's including the dividend. That gain actually surpasses the 14% TSR it generated (per year) over three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with IBU-tec advanced materials (at least 2 which are concerning) , and understanding them should be part of your investment process.

We will like IBU-tec advanced materials 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.

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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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