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TD SYNNEX Corporation (NYSE:SNX) shareholders might be concerned after seeing the share price drop 23% in the last quarter. On the bright side the share price is up over the last half decade. However we are not very impressed because the share price is only up 39%, less than the market return of 98%.
The past week has proven to be lucrative for TD SYNNEX investors, so let's see if fundamentals drove the company's five-year performance.
Our free stock report includes 2 warning signs investors should be aware of before investing in TD SYNNEX. Read for free now.
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.
TD SYNNEX's earnings per share are down 3.0% per year, despite strong share price performance over five years.
By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. Therefore, it's worth taking a look at other metrics to try to understand the share price movements.
The modest 1.7% dividend yield is unlikely to be propping up the share price. In contrast revenue growth of 23% per year is probably viewed as evidence that TD SYNNEX is growing, a real positive. In that case, the company may be sacrificing current earnings per share to drive growth.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So we recommend checking out this free report showing consensus forecasts
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for TD SYNNEX the TSR over the last 5 years was 193%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!