It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For example, the BBI Life Sciences Corporation (HKG:1035) share price has soared 137% in the last three years. That sort of return is as solid as granite. In more good news, the share price has risen 0.7% in thirty days.
See our latest analysis for BBI Life Sciences
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 three years of share price growth, BBI Life Sciences achieved compound earnings per share growth of 64% per year. This EPS growth is higher than the 33% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on BBI Life Sciences’s earnings, revenue and cash flow.
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 incorporates the value of any 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. We note that for BBI Life Sciences the TSR over the last 3 years was 141%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
The last twelve months weren’t great for BBI Life Sciences shares, which performed worse than the market, costing holders 24%, including dividends. Meanwhile, the broader market slid about 8.5%, likely weighing on the stock. Investors are up over three years, booking 34% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. Is BBI Life Sciences cheap compared to other companies? These 3 valuation measures might help you decide.