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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of Vita Life Sciences Limited (ASX:VLS) stock is up an impressive 244% over the last five years.
So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.
View our latest analysis for Vita Life Sciences
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. 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, Vita Life Sciences managed to grow its earnings per share at 43% a year. The EPS growth is more impressive than the yearly share price gain of 28% over the same period. Therefore, it seems the market has become relatively pessimistic about the company.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
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. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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 Vita Life Sciences, it has a TSR of 323% for the last 5 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
We're pleased to report that Vita Life Sciences shareholders have received a total shareholder return of 25% over one year. And that does include the dividend. However, the TSR over five years, coming in at 33% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Vita Life Sciences better, we need to consider many other factors. Take risks, for example - Vita Life Sciences has 3 warning signs we think you should be aware of.