Shareholders Of Qatar Fuel Company Q.P.S.C.(WOQOD) (DSM:QFLS) Must Be Happy With Their 113% Total Return

By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, the Qatar Fuel Company Q.P.S.C.("WOQOD") (DSM:QFLS) share price is up 81% in the last three years, clearly besting the market return of around 21% (not including dividends).

Check out our latest analysis for Qatar Fuel Company Q.P.S.C.(WOQOD)

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Qatar Fuel Company Q.P.S.C.(WOQOD) was able to grow its EPS at 0.9% per year over three years, sending the share price higher. In comparison, the 22% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It's not unusual to see the market 're-rate' a stock, after a few years of growth.

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

Dive deeper into Qatar Fuel Company Q.P.S.C.(WOQOD)'s key metrics by checking this interactive graph of Qatar Fuel Company Q.P.S.C.(WOQOD)'s earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Qatar Fuel Company Q.P.S.C.(WOQOD)'s TSR for the last 3 years was 113%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market gained around 11% in the last year, Qatar Fuel Company Q.P.S.C.(WOQOD) shareholders lost 10% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 17%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Qatar Fuel Company Q.P.S.C.(WOQOD) has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on QA 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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