Repsol (BME:REP) delivers shareholders notable 59% return over 1 year, surging 4.0% in the last week alone

By
Simply Wall St
Published
November 11, 2021
BME:REP
Source: Shutterstock

Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Repsol, S.A. (BME:REP) share price is up 52% in the last 1 year, clearly besting the market return of around 14% (not including dividends). That's a solid performance by our standards! Zooming out, the stock is actually down 29% in the last three years.

Since the stock has added €639m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Repsol

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Repsol went from making a loss to reporting a profit, in the last year.

We think the growth looks very prospective, so we're not surprised the market liked it too. Inflection points like this can be a great time to take a closer look at a company.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
BME:REP Earnings Per Share Growth November 12th 2021

We know that Repsol has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

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. As it happens, Repsol's TSR for the last 1 year was 59%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

It's good to see that Repsol has rewarded shareholders with a total shareholder return of 59% in the last twelve months. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 3% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Repsol better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Repsol you should know about.

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 ES exchanges.

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