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- BMV:FRAGUA B
Corporativo Fragua. de's (BMV:FRAGUAB) earnings growth rate lags the 22% CAGR delivered to shareholders
Some Corporativo Fragua, S.A.B. de C.V. (BMV:FRAGUAB) shareholders are probably rather concerned to see the share price fall 39% over the last three months. But in stark contrast, the returns over the last half decade have impressed. We think most investors would be happy with the 137% return, over that period. To some, the recent pullback wouldn't be surprising after such a fast rise. Only time will tell if there is still too much optimism currently reflected in the share price.
Although Corporativo Fragua. de has shed Mex$3.5b from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
Check out our latest analysis for Corporativo Fragua. de
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
During five years of share price growth, Corporativo Fragua. de achieved compound earnings per share (EPS) growth of 26% per year. This EPS growth is higher than the 19% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.73.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Corporativo Fragua. de has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Corporativo Fragua. de the TSR over the last 5 years was 167%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We're pleased to report that Corporativo Fragua. de shareholders have received a total shareholder return of 9.6% over one year. That's including the dividend. Having said that, the five-year TSR of 22% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Corporativo Fragua. de 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 Corporativo Fragua. de , and understanding them should be part of your investment process.
We will like Corporativo Fragua. de better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 Mexican exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
About BMV:FRAGUA B
Corporativo Fragua. de
Operates pharmacy stores under the Superfarmacia name in Mexico.
Flawless balance sheet, undervalued and pays a dividend.