Should Hellenic Petroleum (ATH:ELPE) Be Disappointed With Their 86% Profit?

By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at Hellenic Petroleum S.A. (ATH:ELPE), which is up 86%, over three years, soundly beating the market return of 0.7% (not including dividends). On the other hand, the returns haven’t been quite so good recently, with shareholders up just 11%, including dividends.

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View our latest analysis for Hellenic Petroleum

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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 three years of share price growth, Hellenic Petroleum achieved compound earnings per share growth of 45% per year. This EPS growth is higher than the 23% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat.

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

ATSE:ELPE Past and Future Earnings, May 24th 2019
ATSE:ELPE Past and Future Earnings, May 24th 2019

It is of course excellent to see how Hellenic Petroleum has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Hellenic Petroleum’s financial health with this free report on its balance sheet.

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 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Hellenic Petroleum the TSR over the last 3 years was 108%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It’s nice to see that Hellenic Petroleum shareholders have received a total shareholder return of 11% over the last year. Of course, that includes the dividend. Having said that, the five-year TSR of 11% a year, is even better. Before forming an opinion on Hellenic Petroleum you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

Of course Hellenic Petroleum may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.