Avast (LON:AVST) Shareholders Have Enjoyed A 20% Share Price Gain
Avast Plc (LON:AVST) shareholders might be concerned after seeing the share price drop 15% in the last quarter. Looking on the brighter side, the stock is actually up over twelve months. But to be blunt its return of 20% fall short of what you could have got from an index fund (around 30%).
View our latest analysis for Avast
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the last year, Avast actually saw its earnings per share drop 35%.
So we don't think that investors are paying too much attention to EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.
Revenue was pretty flat year on year, but maybe a closer look at the data can explain the market optimism.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Avast is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Avast in this interactive graph of future profit estimates.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return 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 a lot higher than the share price return. In the case of Avast, it has a TSR of 23% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're happy to report that Avast are up 23% over the year (even including dividends). Unfortunately this falls short of the market return of around 30%. We regret to inform any shareholders that the share price dropped another 15% in the last three months. It's possible that this is just a short term share price setback. If the business executes and delivers key metric growth, it could definitely be worth putting on your watchlist. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Avast is showing 4 warning signs in our investment analysis , you should know about...
Of course Avast may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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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