Sberbank of Russia (MCX:SBER) Has Gifted Shareholders With A Fantastic 246% Total Return On Their Investment

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on the bright side, you can make far more than 100% on a really good stock. Long term Sberbank of Russia (MCX:SBER) shareholders would be well aware of this, since the stock is up 166% in five years. On top of that, the share price is up 18% in about a quarter. But this could be related to the strong market, which is up 10% in the last three months.

View our latest analysis for Sberbank of Russia

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During five years of share price growth, Sberbank of Russia achieved compound earnings per share (EPS) growth of 30% per year. This EPS growth is higher than the 22% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 7.75.

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

Dive deeper into Sberbank of Russia's key metrics by checking this interactive graph of Sberbank of Russia's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Sberbank of Russia the TSR over the last 5 years was 246%, 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 Sberbank of Russia shareholders have received a total shareholder return of 18% over one year. Of course, that includes the dividend. However, the TSR over five years, coming in at 28% per year, is even more impressive. 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 Sberbank of Russia better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Sberbank of Russia you should know about.

But note: Sberbank of Russia 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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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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