Shareholders Of Tallinna Kaubamaja Grupp (TAL:TKM1T) Must Be Happy With Their 93% Return

When we invest, we're generally looking for stocks that outperform the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, the Tallinna Kaubamaja Grupp AS (TAL:TKM1T) share price is up 32% in the last 5 years, clearly besting the market decline of around 9.2% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 24% in the last year , including dividends .

View our latest analysis for Tallinna Kaubamaja Grupp

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Tallinna Kaubamaja Grupp's earnings per share are down 2.4% per year, despite strong share price performance over five years.

By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. 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 note that the dividend is higher than it was previously - always nice to see. It could be that the company is reaching maturity and dividend investors are buying for the yield. We'd posit that the revenue growth over the last five years, of 5.6% per year, would encourage people to invest.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on Tallinna Kaubamaja Grupp's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Tallinna Kaubamaja Grupp, it has a TSR of 93% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Tallinna Kaubamaja Grupp shareholders gained a total return of 24% during the year. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 14% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Tallinna Kaubamaja Grupp better, we need to consider many other factors. For example, we've discovered 3 warning signs for Tallinna Kaubamaja Grupp 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 EE 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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