Earnings growth outpaced the solid 113% return delivered to Vistry Group (LON:VTY) shareholders over the last year

By
Simply Wall St
Published
October 17, 2021
LSE:VTY
Source: Shutterstock

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. Take, for example Vistry Group PLC (LON:VTY). Its share price is already up an impressive 105% in the last twelve months. Meanwhile the share price is 6.6% higher than it was a week ago. It is also impressive that the stock is up 37% over three years, adding to the sense that it is a real winner.

Since the stock has added UK£163m 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 Vistry Group

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the last year Vistry Group grew its earnings per share (EPS) by 164%. It's fair to say that the share price gain of 105% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about Vistry Group as it was before. This could be an opportunity.

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

earnings-per-share-growth
LSE:VTY Earnings Per Share Growth October 18th 2021

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Vistry Group's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Vistry Group, it has a TSR of 113% for the last 1 year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Vistry Group shareholders have received a total shareholder return of 113% over one year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 15%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 Vistry Group you should know about.

Vistry Group is not the only stock that insiders are buying. 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 GB exchanges.

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