Is La Comer. de's (BMV:LACOMERUBC) 126% Share Price Increase Well Justified?

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For example, the La Comer, S.A.B. de C.V. (BMV:LACOMERUBC) share price has soared 126% in the last three years. That sort of return is as solid as granite. It's also good to see the share price up 22% over the last quarter.

View our latest analysis for La Comer. 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 three years of share price growth, La Comer. de achieved compound earnings per share growth of 41% per year. This EPS growth is higher than the 31% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.

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

It is of course excellent to see how La Comer. de has grown profits over the years, but the future is more important for shareholders. This free interactive report on La Comer. de's balance sheet strength is a great place to start, if you want to investigate the stock further.

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for La Comer. de the TSR over the last 3 years was 130%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Pleasingly, La Comer. de's total shareholder return last year was 63%. And yes, that does include the dividend. So this year's TSR was actually better than the three-year TSR (annualized) of 32%. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. Before deciding if you like the current share price, check how La Comer. de scores on these 3 valuation metrics.

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 MX 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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