If You Had Bought Elvalhalcor Hellenic Copper and Aluminium Industry (ATH:ELHA) Stock Three Years Ago, You Could Pocket A 21% Gain Today

By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, the Elvalhalcor Hellenic Copper and Aluminium Industry S.A. (ATH:ELHA) share price is up 21% in the last three years, clearly besting the market return of around 7.6% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 0.8% in the last year , including dividends .

View our latest analysis for Elvalhalcor Hellenic Copper and Aluminium Industry

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the three years of share price growth, Elvalhalcor Hellenic Copper and Aluminium Industry actually saw its earnings per share (EPS) drop 11% per year.

So we doubt that the market is looking to EPS for its main judge of the company's value. Given this situation, it makes sense to look at other metrics too.

The modest 1.8% dividend yield is unlikely to be propping up the share price. It may well be that Elvalhalcor Hellenic Copper and Aluminium Industry revenue growth rate of 16% over three years has convinced shareholders to believe in a brighter future. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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 Elvalhalcor Hellenic Copper and Aluminium Industry, it has a TSR of 26% for the last 3 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 Elvalhalcor Hellenic Copper and Aluminium Industry shareholders have gained 0.8% (in total) over the last year. And yes, that does include the dividend. That falls short of the 8% it has made, for shareholders, each year, over three years. 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. To that end, you should learn about the 3 warning signs we've spotted with Elvalhalcor Hellenic Copper and Aluminium Industry (including 1 which is is concerning) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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