Did You Participate In Any Of ITEQ's (TPE:6213) Incredible 714% Return?

Long term investing can be life changing when you buy and hold the truly great businesses. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the ITEQ Corporation (TPE:6213) share price has soared 555% over five years. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 17% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 19% in 90 days).

It really delights us to see such great share price performance for investors.

View our latest analysis for ITEQ

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. 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, ITEQ achieved compound earnings per share (EPS) growth of 37% per year. So the EPS growth rate is rather close to the annualized share price gain of 46% per year. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. In fact, the share price seems to largely reflect the EPS growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

This free interactive report on ITEQ's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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 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. As it happens, ITEQ's TSR for the last 5 years was 714%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

ITEQ shareholders gained a total return of 8.7% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 52% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand ITEQ better, we need to consider many other factors. Take risks, for example - ITEQ has 3 warning signs (and 1 which can't be ignored) we think you should know about.

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 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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