If You Had Bought Agilent Technologies (NYSE:A) Shares Five Years Ago You'd Have Earned 239% Returns

By
Simply Wall St
Published
January 15, 2021

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, if you buy shares in a high quality company at the right price, you can gain well over 100%. For instance, the price of Agilent Technologies, Inc. (NYSE:A) stock is up an impressive 239% over the last five years. Also pleasing for shareholders was the 18% gain in the last three months. But this could be related to the strong market, which is up 12% in the last three months.

View our latest analysis for Agilent Technologies

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Agilent Technologies achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is slower than the share price growth of 28% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 54.16.

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

NYSE:A Earnings Per Share Growth January 15th 2021

It might be well worthwhile taking a look at our free report on Agilent Technologies' earnings, revenue and cash flow.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Agilent Technologies' TSR for the last 5 years was 254%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Agilent Technologies shareholders have received a total shareholder return of 42% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 29% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Agilent Technologies better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Agilent Technologies .

We will like Agilent Technologies better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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