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Low-cost index funds make it easy to achieve average market returns. But across the board there are plenty of stocks that underperform the market. For example, the DIOD Maker of Eco-Friendly Equipment and Nutrition Public Joint Stock Company (MCX:DIOD) share price return of 18% over three years lags the market return in the same period. Disappointingly, the share price is down 4.4% in the last year.
Check out our latest analysis for DIOD Maker of Eco-Friendly Equipment and Nutrition
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During three years of share price growth, DIOD Maker of Eco-Friendly Equipment and Nutrition achieved compound earnings per share growth of 33% per year. The average annual share price increase of 5.8% is actually lower than the EPS growth. Therefore, it seems the market has moderated its expectations for growth, somewhat.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
This free interactive report on DIOD Maker of Eco-Friendly Equipment and Nutrition's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of DIOD Maker of Eco-Friendly Equipment and Nutrition, it has a TSR of 45% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
DIOD Maker of Eco-Friendly Equipment and Nutrition shareholders gained a total return of 4.4% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 5.2% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. Importantly, we haven't analysed DIOD Maker of Eco-Friendly Equipment and Nutrition's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.