Is LEWAG Holding's (FRA:KGR) Share Price Gain Of 152% Well Earned?
When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of LEWAG Holding Aktiengesellschaft (FRA:KGR) stock is up an impressive 152% over the last five years. On top of that, the share price is up 12% in about a quarter. But this could be related to the strong market, which is up 12% in the last three months.
Check out our latest analysis for LEWAG Holding
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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, LEWAG Holding achieved compound earnings per share (EPS) growth of 18% per year. This EPS growth is reasonably close to the 20% average annual increase in the share price. Therefore one could conclude that sentiment towards the shares hasn't morphed very much. In fact, the share price seems to largely reflect the EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on LEWAG Holding's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, LEWAG Holding's TSR for the last 5 years was 188%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
LEWAG Holding shareholders gained a total return of 6.6% during the year. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 24% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. Is LEWAG Holding cheap compared to other companies? These 3 valuation measures might help you decide.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
