The most you can lose on any stock is 100% of your capital (assuming you don't use leverage). But on the bright side, you can earn well over 100% on really good stocks. for example, Capral Co., Ltd. (ASX:CAA) share price has soared 162% over the past five years. Most people will be very happy with it. Meanwhile, the stock price is up 1.5% from a week ago.
So let's assess the underlying fundamentals over the past five years to see if they have kept pace with shareholder returns.
Check out our latest analysis for Capral.
Markets are powerful pricing mechanisms, but stock prices reflect not only underlying business performance but also investor sentiment. 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.
Capral has managed to grow its earnings per share at 35% per year over five years. The EPS growth is more impressive than the 21% annual share price increase over the same period. As such, the market doesn't seem to be too enthusiastic about this stock these days. This cautious sentiment is reflected in the company's (fairly low) P/E ratio of 5.44.
The image below shows how EPS has changed over time (unveil the exact values by clicking on the image).
this free This interactive report on Capral'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?
When looking at return on investment, it is important to consider the following differences: Total shareholder return (TSR) and stock price return. Whereas the price/earnings ratio only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often much higher than the share price return. We note that Capral's TSR over the last five years was 266%, which is better than the share price return mentioned above. This is primarily due to dividend payments.
different perspective
It's good to see that Capral returned a total return of 42% to shareholders in the over the last twelve months. Of course, this includes dividends. This growth rate is better than the five-year annual TSR (30%). So it seems like sentiment around the company has been positive lately. In the best-case scenario, this could signal real business momentum and suggest that now could be a great time to dig deeper. It's always interesting to track stock performance over the long term. However, to understand Capral better, we need to consider many other factors. For example, we discovered that 2 warning signs for Capral (1 is not very good to us!) Here's what you need to know before investing.
If you want to check out another company with potentially better financials, don't miss this free A list of companies that have proven they can grow revenue.
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.
