Yahoo Finance The AB Dynamics (LON:ABDP) Share Price Has Soared 868%, Delighting Many Shareholders
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Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the AB Dynamics Plc (LON:ABDP) share price has soared 868% over five years. If that doesn't get you thinking about long term investing, we don't know what will. It's also good to see the share price up 16% over the last quarter. But this could be related to the strong market, which is up 8.4% in the last three months.
Anyone who held for that rewarding ride would probably be keen to talk about it.
See our latest analysis for AB Dynamics
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. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, AB Dynamics achieved compound earnings per share (EPS) growth of 29% per year. This EPS growth is lower than the 57% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 46.02.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that AB Dynamics has improved its bottom line lately, but is it going to grow revenue? Check if analysts think AB Dynamics will grow revenue in the future.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, AB Dynamics's TSR for the last 5 years was 907%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that AB Dynamics has rewarded shareholders with a total shareholder return of 86% in the last twelve months. And that does include the dividend. That's better than the annualised return of 59% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on AB Dynamics it might be wise to click here to see if insiders have been buying or selling shares.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
