Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the TF Bank AB (publ) (STO:TFBANK) share price is up 13% in the last year, clearly besting than the market return of around 5.4% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Note that businesses generally develop over the long term, so it the returns over the last year might not reflect a long term trend.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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.
TF Bank was able to grow EPS by 24% in the last twelve months. It’s fair to say that the share price gain of 13% did not keep pace with the EPS growth. Therefore, it seems the market isn’t as excited about TF Bank as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.29.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of TF Bank’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 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 TF Bank the TSR over the last year was 16%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
TF Bank shareholders should be happy with the total gain of 16% over the last twelve months, including dividends. And the share price momentum remains respectable, with a gain of 27% in the last three months. This suggests the company is continuing to win over new investors. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of TF Bank by clicking this link.
TF Bank is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.