Yahoo Finance Did Alpha Financial Markets Consulting's (LON:AFM) Share Price Deserve to Gain 84%?
One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Alpha Financial Markets Consulting plc (LON:AFM), which is up 84%, over three years, soundly beating the market return of 0.2% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 68% in the last year , including dividends .
See our latest analysis for Alpha Financial Markets Consulting
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 three years of share price growth, Alpha Financial Markets Consulting moved from a loss to profitability. That would generally be considered a positive, so we'd expect the share price to be up.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Alpha Financial Markets Consulting has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Alpha Financial Markets Consulting's financial health with this free report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Alpha Financial Markets Consulting's TSR for the last 3 years was 96%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Pleasingly, Alpha Financial Markets Consulting's total shareholder return last year was 68%. That's including the dividend. So this year's TSR was actually better than the three-year TSR (annualized) of 25%. Given the track record of solid returns over varying time frames, it might be worth putting Alpha Financial Markets Consulting on your watchlist. It's always interesting to track share price performance over the longer term. But to understand Alpha Financial Markets Consulting better, we need to consider many other factors. For example, we've discovered 3 warning signs for Alpha Financial Markets Consulting that you should be aware of before investing here.
We will like Alpha Financial Markets Consulting better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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