Did You Participate In Any Of Just Life Group's (NZSE:JLG) Incredible 520% Return?

By
Simply Wall St
Published
May 23, 2021
NZSE:JLG
Source: Shutterstock

It might be of some concern to shareholders to see the Just Life Group Limited (NZSE:JLG) share price down 16% in the last month. But over five years returns have been remarkably great. To be precise, the stock price is 391% higher than it was five years ago, a wonderful performance by any measure. Arguably, the recent fall is to be expected after such a strong rise. The most important thing for savvy investors to consider is whether the underlying business can justify the share price gain.

Check out our latest analysis for Just Life Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Just Life Group achieved compound earnings per share (EPS) growth of 20% per year. This EPS growth is slower than the share price growth of 37% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. And that's hardly shocking given the track record of growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
NZSE:JLG Earnings Per Share Growth May 23rd 2021

This free interactive report on Just Life Group's earnings, revenue and cash flow 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Just Life Group's TSR for the last 5 years was 520%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

We're pleased to report that Just Life Group shareholders have received a total shareholder return of 90% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 44%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Just Life Group better, we need to consider many other factors. For instance, we've identified 4 warning signs for Just Life Group that you should be aware of.

We will like Just Life Group 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 NZ exchanges.

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