While not a mind-blowing move, it is good to see that the Bouygues SA (EPA:EN) share price has gained 20% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 13% in the last three years, significantly under-performing the market.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the unfortunate three years of share price decline, Bouygues actually saw its earnings per share (EPS) improve by 4.0% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.
With EPS gaining and a declining share price, one would suggest the market is cooling on its view of the company. Of course, this could spell opportunity because if the EPS growth continues long term, it seems very likely the share price will rise too.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on Bouygues' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We've already covered Bouygues' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Bouygues' TSR of was a loss of 4.4% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
Although it hurts that Bouygues returned a loss of 1.2% in the last twelve months, the broader market was actually worse, returning a loss of 2.2%. Longer term investors wouldn't be so upset, since they would have made 2.9%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand Bouygues better, we need to consider many other factors. Take risks, for example - Bouygues has 2 warning signs we think you should be aware of.
Of course Bouygues may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FR 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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