While Howden Joinery Group Plc (LON:HWDN) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 15% in the last quarter. But that shouldn’t obscure the pleasing returns achieved by shareholders over the last three years. To wit, the share price did better than an index fund, climbing 25% during that period.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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 three years of share price growth, Howden Joinery Group achieved compound earnings per share growth of 5.9% per year. In comparison, the 7.8% per year gain in the share price outpaces the EPS growth. So it’s fair to assume the market has a higher opinion of the business than it did three years ago. That’s not necessarily surprising considering the three-year track record of earnings growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Howden Joinery Group’s earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Howden Joinery Group the TSR over the last 3 years was 34%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
It’s good to see that Howden Joinery Group has rewarded shareholders with a total shareholder return of 12% in the last twelve months. Of course, that includes the dividend. That’s better than the annualised return of 6.5% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It’s always interesting to track share price performance over the longer term. But to understand Howden Joinery Group better, we need to consider many other factors. Case in point: We’ve spotted 1 warning sign for Howden Joinery Group you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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