We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many investors. You won't get it right every time, but when you do, the returns can be truly splendid. Take, for example, the Cliq Digital AG (ETR:CLIQ) share price, which skyrocketed 787% over three years. Also pleasing for shareholders was the 37% gain in the last three months. We love happy stories like this one. The company should be really proud of that performance!
So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.
View our latest analysis for Cliq Digital
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During three years of share price growth, Cliq Digital achieved compound earnings per share growth of 147% per year. This EPS growth is higher than the 107% average annual increase in the share price. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 6.01.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It is of course excellent to see how Cliq Digital has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Cliq Digital stock, you should check out this FREE detailed report on its balance sheet.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Cliq Digital the TSR over the last 3 years was 861%, 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
It's nice to see that Cliq Digital shareholders have received a total shareholder return of 6.4% over the last year. Of course, that includes the dividend. However, that falls short of the 26% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. It's always interesting to track share price performance over the longer term. But to understand Cliq Digital better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Cliq Digital (of which 1 is significant!) you should know about.