In This Article:
By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at Poste Italiane SpA (BIT:PST), which is up 65%, over three years, soundly beating the market return of 14% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 48% , including dividends .
View our latest analysis for Poste Italiane
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.
Poste Italiane was able to grow its EPS at 28% per year over three years, sending the share price higher. This EPS growth is higher than the 18% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. We'd venture the lowish P/E ratio of 9.19 also reflects the negative sentiment around the stock.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Poste Italiane has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Poste Italiane will grow revenue in the future.
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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Poste Italiane the TSR over the last 3 years was 95%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Pleasingly, Poste Italiane's total shareholder return last year was 48%. That includes the value of the dividend. That gain actually surpasses the 25% TSR it generated (per year) over three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. Before forming an opinion on Poste Italiane you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.