If You Had Bought AJ Bell (LON:AJB) Shares A Year Ago You'd Have Earned13% Returns
Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the AJ Bell plc (LON:AJB) share price is up 13% in the last year, clearly besting the market decline of around 15% (not including dividends). So that should have shareholders smiling. We'll need to follow AJ Bell for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
See our latest analysis for AJ Bell
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year AJ Bell grew its earnings per share (EPS) by 30%. It's fair to say that the share price gain of 13% did not keep pace with the EPS growth. So it seems like the market has cooled on AJ Bell, despite the growth. Interesting. Of course, with a P/E ratio of 53.89, the market remains optimistic.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that AJ Bell has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
It's nice to see that AJ Bell shareholders have gained 14% over the last year, including dividends. A substantial portion of that gain has come in the last three months, with the stock up 18% in that time. This suggests the company is continuing to win over new investors. It's always interesting to track share price performance over the longer term. But to understand AJ Bell better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for AJ Bell (of which 1 can't be ignored!) you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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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