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Australian Clinical Labs Limited (ASX:ACL) shareholders might be concerned after seeing the share price drop 12% in the last quarter. But looking back over the last year, the returns have actually been rather pleasing! In that time we've seen the stock easily surpass the market return, with a gain of 29%.
So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.
See our latest analysis for Australian Clinical Labs
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 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.
Australian Clinical Labs was able to grow EPS by 9.3% in the last twelve months. This EPS growth is significantly lower than the 29% increase in the share price. This indicates that the market is now more optimistic about the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Australian Clinical Labs, it has a TSR of 32% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Australian Clinical Labs shareholders should be happy with the total gain of 32% over the last twelve months, including dividends. We regret to report that the share price is down 12% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. It's always interesting to track share price performance over the longer term. But to understand Australian Clinical Labs better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Australian Clinical Labs (of which 1 is potentially serious!) you should know about.