If You Had Bought Pan German Universal Motors (TPE:2247) Shares A Year Ago You'd Have Earned 41% Returns

On average, over time, stock markets tend to rise higher. This makes investing attractive. But not every stock you buy will perform as well as the overall market. Over the last year the Pan German Universal Motors Ltd. (TPE:2247) share price is up 41%, but that's less than the broader market return. In contrast, the longer term returns are negative, since the share price is 1.2% lower than it was three years ago.

View our latest analysis for Pan German Universal Motors

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 the last year Pan German Universal Motors grew its earnings per share (EPS) by 53%. This EPS growth is significantly higher than the 41% increase in the share price. Therefore, it seems the market isn't as excited about Pan German Universal Motors as it was before. This could be an opportunity.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We know that Pan German Universal Motors has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Pan German Universal Motors will grow revenue in the future.

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 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Pan German Universal Motors, it has a TSR of 45% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Over the last year Pan German Universal Motors shareholders have received a TSR of 45%. While you don't go broke making a profit, this return was actually lower than the average market return of about 95%. On the other hand, the TSR over three years was worse, at just 3.1% per year. This suggests the company's position is improving. If the business can justify the share price gain with improving fundamental data, then there could be more gains to come. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Pan German Universal Motors (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

Of course Pan German Universal Motors may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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