BNP Paribas’ 17% CAGR (EPA: BNP) topped company profit growth in same three-year period
Low-cost index funds make it easy to obtain average market returns. But overall, there are many stocks that are underperforming the market. For example, the BNP Paribas SA (EPA: BNP) The stock price return of 42% over three years is lower than the market return over the same period. That said, the 29% increase over the past year is good to see.
Based on a strong 7-day performance, let’s check out what role company fundamentals have played in generating long-term returns for shareholders.
See our latest analysis for BNP Paribas
To quote Buffett, âShips will sail around the world but the Flat Earth Society will thrive. There will continue to be wide spreads between price and value in the market … âBy comparing earnings per share (EPS) and changes in stock prices over time, we can get a feel for the changes in investor attitudes towards a company over time.
BNP Paribas was able to increase its EPS by 5.0% per year over three years, driving up the share price. In comparison, the 12% per year gain in the share price exceeds the growth in EPS. This indicates that the market is feeling more optimistic about the stock, after the last few years of progress. It is not uncommon for the market to âre-evaluateâ a stock after a few years of growth.
The graph below illustrates the evolution of EPS over time (reveal the exact values ââby clicking on the image).
We know that BNP Paribas has improved its results lately, but will it increase its turnover? Check whether analysts believe BNP Paribas will increase revenue in the future.
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 discounted capital increase and spin-off. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. Note that for BNP Paribas the TSR over the last 3 years was 60%, which is better than the return on the share price mentioned above. And there’s no price guessing that dividend payments largely explain the discrepancy!
A different perspective
We are pleased to announce that BNP Paribas shareholders have achieved a total shareholder return of 35% over one year. And that includes the dividend. This gain is better than the annual TSR over five years which is 4%. Therefore, it seems that sentiment around the company has been positive lately. Since stock price dynamics remain strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Concrete example: we have spotted 2 alarm signals for BNP Paribas you have to be aware of this, and one of them cannot be ignored.
Sure BNP Paribas may not be the best stock to buy. So you might want to see this free collection of growth stocks.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on FR stock exchanges.
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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 any stock 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 any of the stocks mentioned.