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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 Intellect Design Arena Limited (NSE:INTELLECT) share price is 14% higher than it was a year ago, much better than the market return of around -2.7% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 1.6% higher than it was three years ago.
View our latest analysis for Intellect Design Arena
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Intellect Design Arena was able to grow EPS by 168% in the last twelve months. It's fair to say that the share price gain of 14% did not keep pace with the EPS growth. So it seems like the market has cooled on Intellect Design Arena, despite the growth. Interesting.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on Intellect Design Arena's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We've already covered Intellect Design Arena's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that Intellect Design Arena's TSR, at 14% is higher than its share price return of 14%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It's nice to see that Intellect Design Arena shareholders have gained 14% (in total) over the last year. That gain actually surpasses the 2.7% TSR it generated (per year) over three years. The improving returns to shareholders suggests the stock is becoming more popular with time. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.