Shareholders Of Bank Leumi le- Israel B.M (TLV:LUMI) Must Be Happy With Their 103% Total Return

By
Simply Wall St
Published
June 27, 2021
TASE:LUMI
Source: Shutterstock

Stock pickers are generally looking for stocks that will outperform the broader market. And in our experience, buying the right stocks can give your wealth a significant boost. To wit, the Bank Leumi le- Israel B.M share price has climbed 82% in five years, easily topping the market return of 63% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 42% in the last year.

See our latest analysis for Bank Leumi le- Israel B.M

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Bank Leumi le- Israel B.M achieved compound earnings per share (EPS) growth of 12% per year. So the EPS growth rate is rather close to the annualized share price gain of 13% per year. That suggests that the market sentiment around the company hasn't changed much over that time. Indeed, it would appear the share price is reacting to the EPS.

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

earnings-per-share-growth
TASE:LUMI Earnings Per Share Growth June 28th 2021

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Bank Leumi le- Israel B.M's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Bank Leumi le- Israel B.M's TSR of 103% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

Bank Leumi le- Israel B.M provided a TSR of 42% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 15% over half a decade This suggests the company might be improving over time. Before deciding if you like the current share price, check how Bank Leumi le- Israel B.M scores on these 3 valuation metrics.

Of course Bank Leumi le- Israel B.M 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 IL 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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