LVMH Moët Hennessy - Louis Vuitton Société Européenne's (EPA:MC) five-year earnings growth trails the 9.0% YoY shareholder returns

LVMH Moët Hennessy - Louis Vuitton, Société Européenne (EPA:MC) shareholders might be concerned after seeing the share price drop 29% in the last quarter. On the bright side the share price is up over the last half decade. Unfortunately its return of 41% is below the market return of 89%.

The past week has proven to be lucrative for LVMH Moët Hennessy - Louis Vuitton Société Européenne investors, so let's see if fundamentals drove the company's five-year performance.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 five years of share price growth, LVMH Moët Hennessy - Louis Vuitton Société Européenne achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is higher than the 7% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for LVMH Moët Hennessy - Louis Vuitton Société Européenne the TSR over the last 5 years was 54%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market lost about 2.5% in the twelve months, LVMH Moët Hennessy - Louis Vuitton Société Européenne shareholders did even worse, losing 34% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 9% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand LVMH Moët Hennessy - Louis Vuitton Société Européenne better, we need to consider many other factors. For instance, we've identified 1 warning sign for LVMH Moët Hennessy - Louis Vuitton Société Européenne that you should be aware of.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.