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For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. Just think about the savvy investors who held Ernst Russ AG (ETR:HXCK) shares for the last five years, while they gained 674%. If that doesn't get you thinking about long term investing, we don't know what will. We note the stock price is up 2.0% in the last seven days. It really delights us to see such great share price performance for investors.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Check out our latest analysis for Ernst Russ
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Over half a decade, Ernst Russ managed to grow its earnings per share at 81% a year. The EPS growth is more impressive than the yearly share price gain of 51% over the same period. So one could conclude that the broader market has become more cautious towards the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 3.86.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Ernst Russ has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Ernst Russ' financial health with this free 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. 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. In the case of Ernst Russ, it has a TSR of 832% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that Ernst Russ shareholders have received a total shareholder return of 41% over the last year. And that does include the dividend. However, the TSR over five years, coming in at 56% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Ernst Russ better, we need to consider many other factors. Even so, be aware that Ernst Russ is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...