Investing in Phoenix Mecano (VTX:PMN) a year ago would have delivered you a 16% gain
These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the Phoenix Mecano AG (VTX:PMN) share price is 11% higher than it was a year ago, much better than the market decline of around 2.8% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! In contrast, the longer term returns are negative, since the share price is 2.6% lower than it was three years ago.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Phoenix Mecano
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).
Phoenix Mecano was able to grow EPS by 14% in the last twelve months. This EPS growth is significantly higher than the 11% increase in the share price. So it seems like the market has cooled on Phoenix Mecano, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 9.94.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Phoenix Mecano has grown profits over the years, but the future is more important for shareholders. This free interactive report on Phoenix Mecano's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Phoenix Mecano the TSR over the last 1 year was 16%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that Phoenix Mecano shareholders have received a total shareholder return of 16% over the last year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 2% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Phoenix Mecano is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Swiss exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.