The worst outcome after buying shares in a company (assuming there is no leverage) would be if you lost all the money you invested. But on the other hand, you can earn a lot Continued greater than 100% if the business is doing well. For example the Mirbud S.A. (WSE:MRB) the stock price is 266% higher than it was three years ago. This kind of back is as solid as granite. It even increased by 22% last week.
After a strong gain last week, it’s worth seeing if longer-term returns have been driven by improving fundamentals.
Discover our latest analysis for Mirbud
In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. By comparing earnings per share (EPS) and share price changes over time, we can get an idea of how investors’ attitudes toward a company change over time.
Mirbud was able to increase its EPS by 68% per year over three years, driving up the share price. This EPS growth is greater than the average annual share price increase of 54%. Therefore, it seems that the market has moderated its growth expectations somewhat. This cautious sentiment is reflected in its (rather low) P/E ratio of 2.97.
You can see below how the EPS has evolved over time (find out the exact values by clicking on the image).
It might be interesting to take a look at our free Mirbud earnings, revenue and cash flow report.
What about dividends?
It is important to consider the total shareholder return, as well as the stock price return, for a given stock. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. Note that for Mirbud the TSR over the last 3 years was 277%, which is better than the share price return mentioned above. The dividends paid by the company thus inflated the total return to shareholders.
A different perspective
Mirbud investors had a difficult year, with a total loss of 3.3% (including dividends), against a market gain of around 8.7%. Even good stock prices sometimes drop, but we want to see improvements in a company’s fundamentals before we get too interested. On the positive side, long-term shareholders have made money, gaining 23% per year over half a decade. If fundamentals continue to point to sustainable long-term growth, the current sell-off could be an opportunity to consider. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we have identified 1 warning sign for Mirbud of which you should be aware.
Sure Mirbud may not be the best stock to buy. So you might want to see this free collection of growth values.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on PL exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.