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By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, the Nexus Infrastructure plc (LON:NEXS) share price is up 61% in the last three years, clearly besting the market return of around 0.4% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 21% , including dividends .
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Nexus Infrastructure
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Nexus Infrastructure became profitable within the last three years. So we would expect a higher share price over the period.
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 Nexus Infrastructure has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Nexus Infrastructure 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Nexus Infrastructure, it has a TSR of 68% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Pleasingly, Nexus Infrastructure's total shareholder return last year was 21%. That's including the dividend. That gain actually surpasses the 19% 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. It's always interesting to track share price performance over the longer term. But to understand Nexus Infrastructure better, we need to consider many other factors. Take risks, for example - Nexus Infrastructure has 2 warning signs we think you should be aware of.