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When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term CVS Group plc (LON:CVSG) shareholders would be well aware of this, since the stock is up 197% in five years. It's also good to see the share price up 43% over the last quarter.
Check out our latest analysis for CVS Group
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, CVS Group achieved compound earnings per share (EPS) growth of 9.4% per year. This EPS growth is lower than the 24% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 143.17.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Dive deeper into the earnings by checking this interactive graph of CVS Group's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We've already covered CVS Group's share price action, but we should also mention its total shareholder return (TSR). 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. Its history of dividend payouts mean that CVS Group's TSR of 202% over the last 5 years is better than the share price return.
A Different Perspective
It's nice to see that CVS Group shareholders have received a total shareholder return of 149% over the last year. That's better than the annualised return of 25% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand CVS Group better, we need to consider many other factors. For example, we've discovered 2 warning signs for CVS Group that you should be aware of before investing here.