Advertisement
Singapore markets closed
  • Straits Times Index

    3,296.56
    -7.44 (-0.23%)
     
  • S&P 500

    5,487.03
    +13.80 (+0.25%)
     
  • Dow

    38,834.86
    +56.76 (+0.15%)
     
  • Nasdaq

    17,862.23
    +5.21 (+0.03%)
     
  • Bitcoin USD

    65,621.00
    +518.62 (+0.80%)
     
  • CMC Crypto 200

    1,365.84
    -16.83 (-1.22%)
     
  • FTSE 100

    8,219.15
    +14.04 (+0.17%)
     
  • Gold

    2,345.80
    -1.10 (-0.05%)
     
  • Crude Oil

    81.42
    -0.15 (-0.18%)
     
  • 10-Yr Bond

    4.2170
    0.0000 (0.00%)
     
  • Nikkei

    38,633.02
    +62.26 (+0.16%)
     
  • Hang Seng

    18,335.32
    -95.07 (-0.52%)
     
  • FTSE Bursa Malaysia

    1,592.69
    -7.10 (-0.44%)
     
  • Jakarta Composite Index

    6,819.32
    +92.40 (+1.37%)
     
  • PSE Index

    6,344.56
    -21.47 (-0.34%)
     

Investors in Vulcan Materials (NYSE:VMC) have seen splendid returns of 111% over the past five years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term Vulcan Materials Company (NYSE:VMC) shareholders would be well aware of this, since the stock is up 102% in five years.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

Check out our latest analysis for Vulcan Materials

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

ADVERTISEMENT

Over half a decade, Vulcan Materials managed to grow its earnings per share at 12% a year. This EPS growth is lower than the 15% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

We know that Vulcan Materials has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Vulcan Materials, it has a TSR of 111% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

We're pleased to report that Vulcan Materials shareholders have received a total shareholder return of 33% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 16% 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. It's always interesting to track share price performance over the longer term. But to understand Vulcan Materials better, we need to consider many other factors. Even so, be aware that Vulcan Materials is showing 2 warning signs in our investment analysis , you should know about...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.