Stock Analysis

Did You Participate In Any Of Brødrene Hartmann's (CPH:HART) Fantastic 114% Return ?

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CPSE:HART
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Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, the Brødrene Hartmann A/S (CPH:HART) share price is up 90% in the last 5 years, clearly besting the market return of around 37% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 69% in the last year.

See our latest analysis for Brødrene Hartmann

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 five years of share price growth, Brødrene Hartmann achieved compound earnings per share (EPS) growth of 26% per year. This EPS growth is higher than the 14% average annual increase in the share price. Therefore, it seems the market has become relatively pessimistic about the company.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
CPSE:HART Earnings Per Share Growth December 25th 2020

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

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Brødrene Hartmann's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Brødrene Hartmann shareholders, and that cash payout contributed to why its TSR of 114%, over the last 5 years, is better than the share price return.

A Different Perspective

It's good to see that Brødrene Hartmann has rewarded shareholders with a total shareholder return of 69% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 16% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 1 warning sign with Brødrene Hartmann , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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