The easiest way to invest in stocks is to buy exchange-traded funds. But if you pick the right individual stocks, you could earn more than that. For example, the Xpediator Plc (LON:XPD) The stock price has risen 26% over the past year, clearly outperforming the market yield of around 9.7% (excluding dividends). If he can maintain this outperformance over the long term, investors will do very well! Looking back, the stock price is 22% higher than it was three years ago.
Since it’s been a good week for Xpediator shareholders, let’s take a look at the trend in longer-term fundamentals.
Check out our latest review for Xpediator
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. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
Over the past year, Xpediator has seen its earnings per share (EPS) rise sharply. We don’t think the exact number is a good indicator of sustainable growth rate, but we think this kind of increase is impressive. We’re not surprised the stock price is up. We’re big believers in letting inflection points like this guide our research as stock pickers.
You can see how EPS has changed over time in the image below (click on the graph to see the exact values).
We are pleased to report that the CEO is compensated more modestly than most CEOs of similarly capitalized companies. But while it’s still worth checking out CEO compensation, the really important question is whether the company can increase its profits in the future. Dive deeper into earnings by viewing this interactive revenue, revenue, and cash flow chart from Xpediator.
What about dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, based on the assumption that dividends are reinvested. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. We note that for Xpediator the TSR over the last year was 29%, which is better than the stock price return mentioned above. The dividends paid by the company thus inflated the total return to shareholders.
A different perspective
We are pleased to report that Xpediator has rewarded shareholders with a total shareholder return of 29% over the past year. This includes the value of the dividend. So this year’s TSR was actually better than the three-year (annualized) TSR of 9%. These improved returns may hint at genuine trading momentum, implying that now could be a great time to dig deeper. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take risks, for example – Xpediator has 2 warning signs we think you should know.
For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.
Please note that the market returns quoted in this article reflect the market-weighted average returns of the shares currently trading on UK stock 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.