Yahoo Finance Did You Participate In Any Of Anglo Asian Mining's (LON:AAZ) Incredible 735% Return?
Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held Anglo Asian Mining PLC (LON:AAZ) shares for the last five years, while they gained 611%. If that doesn't get you thinking about long term investing, we don't know what will. In the last week the share price is up 2.3%.
We love happy stories like this one. The company should be really proud of that performance!
View our latest analysis for Anglo Asian Mining
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.
During the last half decade, Anglo Asian Mining became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Anglo Asian Mining share price is up 191% in the last three years. Meanwhile, EPS is up 109% per year. This EPS growth is higher than the 43% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.98.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Anglo Asian Mining has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
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. We note that for Anglo Asian Mining the TSR over the last 5 years was 735%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Investors in Anglo Asian Mining had a tough year, with a total loss of 5.6% (including dividends), against a market gain of about 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 53% 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 Anglo Asian Mining better, we need to consider many other factors. For instance, we've identified 1 warning sign for Anglo Asian Mining that you should be aware of.
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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 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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