Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the IndigoVision Group plc (LON:IND) share price is up 81% in the last year, clearly besting the market return of around 8.0% (not including dividends). That’s a solid performance by our standards! However, the stock hasn’t done so well in the longer term, with the stock only up 25% in three years.
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…’ 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 the last year IndigoVision Group grew its earnings per share, moving from a loss to a profit.
We think the growth looks very prospective, so we’re not surprised the market liked it too. Generally speaking the profitability inflection point is a great time to research a company closely, lest you miss an opportunity to profit.
The graphic below depicts how EPS has changed over time.
We know that IndigoVision Group has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling IndigoVision Group stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We’d be remiss not to mention the difference between IndigoVision Group’s total shareholder return (TSR) and its share price return. 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. IndigoVision Group’s TSR of 81% for the year exceeded its share price return, because it has paid dividends.
A Different Perspective
It’s nice to see that IndigoVision Group shareholders have received a total shareholder return of 81% over the last year. Notably the five-year annualised TSR loss of 10.0% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Before spending more time on IndigoVision Group it might be wise to click here to see if insiders have been buying or selling shares.
We will like IndigoVision Group 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 GB exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.