Capri Global Capital (NSE: CGCL) stock outperforms its underlying earnings growth over the past five years
For many, the main goal of investing in the stock market is to earn spectacular returns. And the highest quality companies can see their stock prices rise dramatically. For example, the Capri Global Capital Limited (NSE: CGCL) The stock price has risen 632% over the past half-decade, a nice return for long-term holders. If that doesn’t make you think about investing for the long term, we don’t know what will. Last week, the stock price rose 4.9%. Anyone who has stood for this rewarding race would probably want to talk about it.
Based on a strong 7-day performance, let’s check out what role company fundamentals have played in generating long-term returns for shareholders.
Check out our latest review for Capri Global Capital
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. An imperfect but reasonable way to gauge how sentiment is changing around a company is to compare earnings per share (EPS) with the stock price.
Over the five years of share price growth, Capri Global Capital has achieved compound earnings per share (EPS) growth of 38% per year. This EPS growth is lower than the 49% average annual increase in the share price. So it’s fair to assume that the market has a better opinion of the company than it did five years ago. This isn’t necessarily surprising given the track record of five-year earnings growth. This optimism can be seen in its fairly high P / E ratio of 51.92.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
We know that Capri Global Capital has improved its results lately, but will it increase its revenues? If you are interested, you can check this free report showing consensus revenue forecast.
What about dividends?
In addition to measuring stock price performance, investors should also consider the total shareholder return (TSR). While the share price return reflects only the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital increase or spin- off updated. Arguably, the TSR gives a more complete picture of the return generated by a stock. In the case of Capri Global Capital, it has a TSR of 642% for the past 5 years. This exceeds the return on its share price that we mentioned earlier. The dividends paid by the company thus boosted the total shareholder return.
A different perspective
It is good to see that Capri Global Capital has rewarded its shareholders with a total shareholder return of 127% over the past twelve months. And that includes the dividend. This is better than the annualized return of 49% over half a decade, which implies that the company has been doing better recently. Someone with an optimistic outlook might view the recent improvement in TSR as indicating that the business itself is improving over time. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really get an overview, we have to take other information into account as well. To this end, you should inquire about the 2 warning signs we spotted with Capri Global Capital (including 1 which is a bit worrying).
If you like to buy stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks that currently trade on the IN exchanges.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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