Shareholders Of Karelia Tobacco (ATH:KARE) Must Be Happy With Their 38% Return

By
Simply Wall St
Published
May 29, 2021
ATSE:KARE
Source: Shutterstock

The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market But Karelia Tobacco Company Inc. (ATH:KARE) has fallen short of that second goal, with a share price rise of 17% over five years, which is below the market return. Over the last twelve months the stock price has risen a very respectable 12%.

See our latest analysis for Karelia Tobacco

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 five years of share price growth, Karelia Tobacco achieved compound earnings per share (EPS) growth of 0.3% per year. This EPS growth is lower than the 3% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth.

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

earnings-per-share-growth
ATSE:KARE Earnings Per Share Growth May 30th 2021

This free interactive report on Karelia Tobacco's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Karelia Tobacco, it has a TSR of 38% for the last 5 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that Karelia Tobacco shareholders have received a total shareholder return of 16% over the last year. Of course, that includes the dividend. That's better than the annualised return of 7% 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. Keeping this in mind, a solid next step might be to take a look at Karelia Tobacco's dividend track record. This free interactive graph is a great place to start.

But note: Karelia Tobacco may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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