Stock pickers are typically looking for stocks that outperform the overall market. And while aggressive stock selection involves risk (requires diversification), it can also yield excess returns. That means ALS stock is up 63% in his five years, easily exceeding the market return of 26% (ignoring dividends). However, recent returns haven’t been as impressive, with the share price returning just 5.3% over the last year, including dividends.
So let’s assess the underlying fundamentals over the past five years to see if they have kept pace with shareholder returns.
See the latest analysis on ALS.
Markets are powerful pricing mechanisms, but stock prices reflect not only underlying business performance but also investor sentiment. One imperfect but simple way to consider how the market perception of a company has changed is to compare the change in the earnings per share (EPS) with the share price movement.
During the five-year period of share price appreciation, ALS achieved compound earnings per share (EPS) growth of 12% per year. This EPS growth is higher than the average annual increase in the share price of 10%. Therefore, the market seems to have a relatively pessimistic view of the company.
The company’s earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Even so, future profits will be far more important than whether current shareholders make money.It might be well worth taking a look at ours free Report on ALS’ earnings, revenue, and cash flow.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. We note that ALS’s TSR over the last five years was 87%, which is better than the share price return mentioned above. And there’s no kudos to speculating that dividend payments are the main explanation for the divergence.
different perspective
ALS shareholders received a total return of 5.3% for the year. Unfortunately, this falls short of market returns. Looking back over five years, the return is even better, at 13% per year over five years. There’s a good chance the business will continue to perform well despite the slowing share price growth. I think it’s very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well.Still, be aware that ALS is progressing 2 warning signs in investment analysis you should know…
ALS isn’t the only company with insiders buying stock.So take a look at this free A list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
