Biosynex (EPA:ALBIO) delivers shareholders enviable 53% CAGR over 5 years, surging 10% in the last week alone

By
Simply Wall St
Published
August 20, 2021
ENXTPA:ALBIO
Source: Shutterstock

Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. Don't believe it? Then look at the Biosynex SA (EPA:ALBIO) share price. It's 715% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. It's also up 13% in about a month. It really delights us to see such great share price performance for investors.

Since it's been a strong week for Biosynex shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Biosynex

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 the five years of share price growth, Biosynex moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Biosynex share price is up 683% in the last three years. In the same period, EPS is up 363% per year. This EPS growth is higher than the 99% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 6.97.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
ENXTPA:ALBIO Earnings Per Share Growth August 21st 2021

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Biosynex the TSR over the last 5 years was 750%, 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

It's good to see that Biosynex has rewarded shareholders with a total shareholder return of 141% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 53%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Biosynex you should know about.

We will like Biosynex better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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