BKW shareholders (VTX: BKW) achieved a 20% CAGR in the past five years
The maximum you can lose on any stock (assuming you’re not using leverage) is 100% of your money. But when you choose a business that is truly successful, you can Make more than 100%. For example, the BKW SA (VTX: BKW) The stock price has climbed 118% in the past five years. Most would be very happy. Last week, the stock price fell about 2.5%.
Now, it’s worth taking a look at the fundamentals of the business, as it will help us determine whether the long-term return to shareholders matches the performance of the underlying business.
See our latest review for BKW
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly responsive dynamic systems and investors are not always rational. By comparing earnings per share (EPS) and changes in the share price over time, we can get a sense of how investors’ attitudes towards a company have changed over time.
During the five years of share price growth, BKW has achieved compound earnings per share (EPS) growth of 3.7% per year. This EPS growth is slower than the share price growth of 17% per year over the same period. So it’s fair to assume that the market has a better opinion of the company than it did five years ago. This isn’t necessarily surprising given the track record of five-year earnings growth.
The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).
Dive deeper into key BKW metrics by viewing this interactive graph of BKW earnings, income and cash flow.
What about dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any capital increase and discounted spin-off. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. In the case of BKW, it has a TSR of 149% for the past 5 years. This exceeds the return on its share price that we mentioned earlier. The dividends paid by the company thus boosted the total shareholder return.
A different perspective
BKW shareholders achieved a total return of 6.1% during the year. Unfortunately, this is below market performance. On the positive side, longer-term returns (around 20% per year, over half a decade) look better. It is entirely possible that the company will continue to perform well, even if the stock price gains slow. It is always interesting to follow the evolution of stock prices over the long term. But to understand BKW better, there are many other factors to consider. To do this, you need to know the 1 warning sign we spotted with BKW.
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Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the CH exchanges.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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