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 if you buy shares in a really great company, you can more than double your money. For instance the Kulmbacher Brauerei Aktien-Gesellschaft (MUN:KUL) share price is 121% higher than it was three years ago. That sort of return is as solid as granite. It's even up 5.4% in the last week.
View our latest analysis for Kulmbacher Brauerei Aktien-Gesellschaft
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, Kulmbacher Brauerei Aktien-Gesellschaft achieved compound earnings per share growth of 12% per year. In comparison, the 30% per year gain in the share price outpaces the EPS growth. This indicates that the market is feeling more optimistic on the stock, after the last few years of progress. It's not unusual to see the market 're-rate' a stock, after a few years of growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It might be well worthwhile taking a look at our free report on Kulmbacher Brauerei Aktien-Gesellschaft'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 spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Kulmbacher Brauerei Aktien-Gesellschaft's TSR for the last 3 years was 134%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's good to see that Kulmbacher Brauerei Aktien-Gesellschaft has rewarded shareholders with a total shareholder return of 8.6% in the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 17% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. Before forming an opinion on Kulmbacher Brauerei Aktien-Gesellschaft you might want to consider these 3 valuation metrics.