The GlaxoSmithKline Pharmaceuticals (NSE:GLAXO) Share Price Is Up 32% And Shareholders Are Holding On

It hasn't been the best quarter for GlaxoSmithKline Pharmaceuticals Limited (NSE:GLAXO) shareholders, since the share price has fallen 11% in that time. But over the last three years returns have been decent. In that time the stock gained 32%, besting the market return of 29%.

Check out our latest analysis for GlaxoSmithKline Pharmaceuticals

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

GlaxoSmithKline Pharmaceuticals was able to grow its EPS at 11% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 10% average annual increase in the share price. That suggests that the market sentiment around the company hasn't changed much over that time. Quite to the contrary, the share price has arguably reflected the EPS growth.

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

We know that GlaxoSmithKline Pharmaceuticals has improved its bottom line lately, but is it going to grow revenue? Check if analysts think GlaxoSmithKline Pharmaceuticals will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, GlaxoSmithKline Pharmaceuticals' TSR for the last 3 years was 39%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

GlaxoSmithKline Pharmaceuticals provided a TSR of 20% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 3% per year, over five years. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand GlaxoSmithKline Pharmaceuticals better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with GlaxoSmithKline Pharmaceuticals , and understanding them should be part of your investment process.

We will like GlaxoSmithKline Pharmaceuticals 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 IN 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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