Credit Bank of Moscow's (MCX:CBOM) 12% CAGR outpaced the company's earnings growth over the same five-year period

By
Simply Wall St
Published
January 13, 2022
MISX:CBOM
Source: Shutterstock

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, the Credit Bank of Moscow (public joint-stock company) (MCX:CBOM) share price is 70% higher than it was five years ago, which is more than the market average. It's also good to see that the stock is up 14% in a year.

Since it's been a strong week for Credit Bank of Moscow shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for Credit Bank of Moscow

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During five years of share price growth, Credit Bank of Moscow achieved compound earnings per share (EPS) growth of 23% per year. This EPS growth is higher than the 11% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. The reasonably low P/E ratio of 7.04 also suggests market apprehension.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
MISX:CBOM Earnings Per Share Growth January 13th 2022

We know that Credit Bank of Moscow has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

What about the Total Shareholder Return (TSR)?

We've already covered Credit Bank of Moscow's share price action, but we should also mention its 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. Dividends have been really beneficial for Credit Bank of Moscow shareholders, and that cash payout contributed to why its TSR of 73%, over the last 5 years, is better than the share price return.

A Different Perspective

Credit Bank of Moscow shareholders gained a total return of 14% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 12% per year over five year. It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand Credit Bank of Moscow 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 Credit Bank of Moscow , and understanding them should be part of your investment process.

But note: Credit Bank of Moscow may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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