One easy way to profit from the stock market is to buy index funds. But if you pick good individual stocks, you can get good returns.Please take a look AMPOLE LIMITED. (ASX:ALD) is up 60% in three years, well above the market return of 9.3% (not including dividends). On the other hand, recent earnings haven't been very good, with shareholder returns including dividends at just 35%.
So let's assess the underlying fundamentals over the past three years, and see if they have kept pace with shareholder returns.
Check out our latest analysis for Ampol.
In Buffett's words, “Ships will sail around the world, but a flat-earth society will thrive.'' There will continue to be a wide discrepancy between price and value in the marketplace…'' One imperfect but simple way to consider how market perception has changed is to compare the change in the earnings per share (EPS) with the share price. price movement.
During three years of stock price growth, Ampol went from a loss to a profit. Therefore, the stock price is expected to rise during this period.
You can see below how EPS has changed over time (unveil the exact values by clicking on the image).
Of course, it's great to see how Ampol has grown its profits over the years, but the future is more important to shareholders. Check this out if you're looking to buy or sell Ampol stock. free Detailed report on balance sheet.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. For Ampol, the TSR for the last three years was 93%. 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
We're pleased to report that Ampol shareholders have received a total shareholder return of 35% over one year. Of course, this includes dividends. This is better than the 12% annualized return over the past five years, suggesting that the company has performed well of late. In the best-case scenario, this could signal real business momentum and suggest that now could be a great time to dig deeper. 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 identified 2 warning signs for Ampol What you need to know.
If you want to buy stocks with management, you might like this free List of companies. (Hint: Insiders are buying them).
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 using only unbiased methodologies, based on historical data and analyst forecasts, 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.
