If You Had Bought Galaxy Software Services (GTSM:6752) Stock A Year Ago, You Could Pocket A 22% Gain Today

It hasn't been the best quarter for Galaxy Software Services Corporation (GTSM:6752) shareholders, since the share price has fallen 26% in that time. Looking on the brighter side, the stock is actually up over twelve months. However, its return of 22% does fall short of the market return of, 33%.

See our latest analysis for Galaxy Software Services

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During the last year Galaxy Software Services grew its earnings per share (EPS) by 47%. It's fair to say that the share price gain of 22% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about Galaxy Software Services as it was before. This could be an opportunity.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It is of course excellent to see how Galaxy Software Services has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Galaxy Software Services' financial health with this free report on its balance sheet.

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. In the case of Galaxy Software Services, it has a TSR of 26% 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

We're happy to report that Galaxy Software Services are up 26% over the year (even including dividends). While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 33%. Unfortunately the share price is down 26% over the last quarter. It may simply be that the share price got ahead of itself, and its quite possible it will keep moving in the right direction, especially if the business continues to deliver good financial results. 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 risks, for instance. Every company has them, and we've spotted 4 warning signs for Galaxy Software Services you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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