Advertisement
UK markets closed
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • CRUDE OIL

    82.79
    +1.44 (+1.77%)
     
  • GOLD FUTURES

    2,239.10
    +26.40 (+1.19%)
     
  • DOW

    39,762.68
    +2.60 (+0.01%)
     
  • Bitcoin GBP

    55,914.52
    +1,136.95 (+2.08%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • NASDAQ Composite

    16,373.23
    -26.29 (-0.16%)
     
  • UK FTSE All Share

    4,338.05
    +12.12 (+0.28%)
     

Did You Miss PCF Group's (LON:PCF) Impressive 176% Share Price Gain?

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. One great example is PCF Group plc (LON:PCF) which saw its share price drive 176% higher over five years. In the last week shares have slid back 1.4%.

Check out our latest analysis for PCF Group

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

ADVERTISEMENT

During five years of share price growth, PCF Group achieved compound earnings per share (EPS) growth of 6.4% per year. This EPS growth is slower than the share price growth of 22% per year, over the same period. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

AIM:PCF Past and Future Earnings, February 18th 2020
AIM:PCF Past and Future Earnings, February 18th 2020

We know that PCF Group has improved its bottom line lately, but is it going to grow revenue? Check if analysts think PCF Group 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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of PCF Group, it has a TSR of 181% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 12% in the last year, PCF Group shareholders lost 0.5% (even including dividends) . Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 23% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand PCF Group better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with PCF Group (including 1 which is doesn't sit too well with us) .

Of course PCF Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.

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.

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. Thank you for reading.