It hasn't been the best quarter for ACEA S.p.A. (BIT:ACE) shareholders, since the share price has fallen 22% in that time. Looking further back, the stock has generated good profits over five years. It has returned a market beating 25% in that time.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over half a decade, ACEA managed to grow its earnings per share at 12% a year. This EPS growth is higher than the 4.5% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. The reasonably low P/E ratio of 11.49 also suggests market apprehension.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into ACEA's key metrics by checking this interactive graph of ACEA's earnings, revenue 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. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, ACEA's TSR for the last 5 years was 55%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're pleased to report that ACEA shareholders have received a total shareholder return of 1.4% over one year. That's including the dividend. Having said that, the five-year TSR of 9.1% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand ACEA better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for ACEA (of which 1 is a bit concerning!) you should know about.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IT exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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