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Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the V.F. Corporation (NYSE:VFC) share price is up 67% in the last 1 year, clearly besting the market return of around 21% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 54% in the last three years.
Since it's been a strong week for V.F shareholders, let's have a look at trend of the longer term fundamentals.
See our latest analysis for V.F
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.
During the last year V.F grew its earnings per share (EPS) by 82%. Though we do note extraordinary items affected the bottom line. It's fair to say that the share price gain of 67% did not keep pace with the EPS growth. So it seems like the market has cooled on V.F, despite the growth. Interesting.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on V.F's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for V.F the TSR over the last 1 year was 70%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that V.F has rewarded shareholders with a total shareholder return of 70% in the last twelve months. And that does include the dividend. There's no doubt those recent returns are much better than the TSR loss of 9% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand V.F better, we need to consider many other factors. Even so, be aware that V.F is showing 1 warning sign in our investment analysis , you should know about...