Equity investors are typically looking for stocks that will outperform the overall market. Active stock selection involves risk (diversification is necessary), but it can also produce excess returns. That said, Pfeiffer Vacuum Technology’s share price has risen 27% over five years, comfortably beating the market return of 4.6% excluding dividends. However, more recent returns have been less impressive, with the stock returning just 8.4% including dividends last year.
Last week we saw the company’s five-year earnings loss slip, but let’s take a look at the recent trends in the underlying business to see if earnings are in line.
Read our latest analysis for Pfeiffer Vacuum Technologies
In his essay Graham and Doddsville’s Superinvestors Warren Buffett has said that share prices do not always rationally reflect the value of a company. An imperfect but simple way to think about how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) against the share price movement.
During the five years that the share price has grown, Pfeiffer Vacuum Technology has achieved compound annual growth in earnings per share (EPS) of 2.3%. This EPS growth rate is lower than the 5% annual growth rate of the share price over the same period. It is therefore reasonable to consider that the market values the company more highly than it did five years ago. This is not necessarily surprising given the five-year track record of earnings growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close look at historic growth trends, which you can find here.
What about dividends?
In addition to measuring the price-to-earnings ratio, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that factors in the value of cash dividends (assuming that any dividend received was reinvested) as well as the calculated value of any discounted capital raisings and spin-offs. As such, for companies that pay generous dividends, the TSR is often much higher than the price-to-earnings ratio. In the case of Pfeiffer Vacuum Technology, the TSR for the past 5 years is 39%, which exceeds the price-to-earnings ratio mentioned earlier. Thus, the dividends paid by the company have boosted the price-to-earnings ratio. total Shareholder returns.
A different perspective
It’s good to see that Pfeiffer Vacuum Technology has delivered a total shareholder return of 8.4% to shareholders in the last twelve months, and that includes dividends. This is better than the 7% annualized return over five years, suggesting the company has been performing well recently. In the best-case scenario, this could suggest some real business momentum, and now could be a good time to dig deeper. While it’s well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important than that. Still, it’s hard to say why Pfeiffer Vacuum Technology is a strong player. One warning sign in investment analysis things you should know…
Pfeiffer Vacuum Technology would become even more attractive if we saw some significant insider buying, so check this out while we wait. free A list of undervalued stocks (mostly small caps) that have seen significant insider buying recently.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges.
Valuation is complicated, but we can help make it simple.
investigate Pfeiffer Vacuum Technology By checking our comprehensive analysis, you can see whether it may be overvalued or undervalued. Fair value estimates, risks and warnings, dividends, insider trading, financial strength.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
Valuation is complicated, but we can help make it simple.
investigate Pfeiffer Vacuum Technology By checking our comprehensive analysis, you can see whether it may be overvalued or undervalued. Fair value estimates, risks and warnings, dividends, insider trading, financial strength.
View your free analysis
Have feedback about this article? Concerns about the content? Contact us directly. Or email us at editorial-team@simplywallst.com