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When we invest, we're generally looking for stocks that outperform the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. To wit, the International Paper APPM share price has climbed 71% in five years, easily topping the market return of 46% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 28% in the last year.
Check out our latest analysis for International Paper APPM
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
During the five years of share price growth, International Paper APPM moved from a loss to profitability. That's generally thought to be a genuine positive, so we would expect to see an increasing share price. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the International Paper APPM share price is up 49% in the last three years. During the same period, EPS grew by 76% each year. This EPS growth is higher than the 14% average annual increase in the share price over the same three years. Therefore, it seems the market has moderated its expectations for growth, somewhat. This unenthusiastic sentiment is reflected in the stock's reasonably modest P/E ratio of 8.55.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that International Paper APPM has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling International Paper APPM stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that International Paper APPM shareholders have received a total shareholder return of 28% over the last year. That's better than the annualised return of 11% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.