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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Daimler Truck Holding AG (ETR:DTG) share price is 33% higher than it was a year ago, much better than the market return of around 7.1% (not including dividends) in the same period. That's a solid performance by our standards! Daimler Truck Holding hasn't been listed for long, so it's still not clear if it is a long term winner.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
See our latest analysis for Daimler Truck Holding
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Daimler Truck Holding grew its earnings per share (EPS) by 169%. This EPS growth is significantly higher than the 33% increase in the share price. So it seems like the market has cooled on Daimler Truck Holding, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 8.64.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Daimler Truck Holding has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Daimler Truck Holding, it has a TSR of 39% 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
Daimler Truck Holding shareholders should be happy with the total gain of 39% over the last twelve months, including dividends. And the share price momentum remains respectable, with a gain of 8.7% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 2 warning signs we've spotted with Daimler Truck Holding (including 1 which is potentially serious) .