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Long term investing can be life changing when you buy and hold the truly great businesses. While not every stock performs well, when investors win, they can win big. For example, the Genesis Minerals Limited (ASX:GMD) share price is up a whopping 800% in the last half decade, a handsome return for long term holders. If that doesn't get you thinking about long term investing, we don't know what will. Meanwhile the share price is 5.2% higher than it was a week ago. We love happy stories like this one. The company should be really proud of that performance!
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
Check out our latest analysis for Genesis Minerals
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last half decade, Genesis Minerals became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Genesis Minerals has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Genesis Minerals will grow revenue in the future.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Genesis Minerals' total shareholder return (TSR) and its 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. Genesis Minerals hasn't been paying dividends, but its TSR of 847% exceeds its share price return of 800%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
It's nice to see that Genesis Minerals shareholders have received a total shareholder return of 96% over the last year. That gain is better than the annual TSR over five years, which is 57%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before forming an opinion on Genesis Minerals you might want to consider these 3 valuation metrics.