When we invest, we typically look for stocks that outperform the market average. And in our experience, buying the right stocks can significantly increase your wealth. for example, Super Retail Group Co., Ltd. (ASX:SUL) share price is up 96% over the past five years, clearly outperforming the market return of around 26% (ignoring dividends). However, recent gains have been less impressive, with the share price returning just 32% in the last year, including dividends.
So let's do some research and see if the company's long-term performance is in line with the progress of its underlying business.
Check out our latest analysis for Super Retail Group.
While there is no denying that markets are sometimes efficient, prices do not always reflect underlying company performance. One imperfect but simple way to consider how the market perception of a company has changed is to compare the change in the earnings per share (EPS) with the share price movement.
During the five-year period of share price growth, Super Retail Group achieved compounded earnings per share (EPS) growth of 12% per year. Therefore, the EPS growth rate is quite close to the annualized share price increase of 14% per year. Therefore, we can conclude that sentiment towards the stock hasn't changed much. In fact, stock prices seem to largely reflect EPS growth.
You can see below how EPS has changed over time (unveil the exact values by clicking on the image).
this free This interactive report on Super Retail Group's earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.
What will happen to the dividend?
As well as measuring share price return, investors should also consider 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 increases and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. For Super Retail Group, the TSR for the last 5 years is 165%. This exceeds the stock return mentioned earlier. And there's no kudos to speculating that dividend payments are the main explanation for the divergence.
different perspective
It's good to see that Super Retail Group shareholders received a total shareholder return of 32% over the last year. Of course, this includes dividends. This is better than the 22% annualized return over the past five years, suggesting that the company has performed well of late. Given the share price momentum remains strong, it might be worth taking a closer look at the stock to make sure you don't miss out. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we discovered that 1 warning sign for Super Retail Group What you need to know before investing here.
However, please note: Super Retail Group may not be the best stock to buy.So take a look at this free A list of interesting companies that have grown their earnings in the past (and are predicted to grow in the future).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
