UK markets closed
  • FTSE 100

    7,168.65
    -0.63 (-0.01%)
     
  • FTSE 250

    18,636.98
    -29.80 (-0.16%)
     
  • AIM

    875.21
    -1.01 (-0.12%)
     
  • GBP/EUR

    1.1593
    -0.0018 (-0.16%)
     
  • GBP/USD

    1.2103
    -0.0072 (-0.59%)
     
  • BTC-GBP

    15,809.99
    -394.45 (-2.43%)
     
  • CMC Crypto 200

    420.84
    +0.70 (+0.17%)
     
  • S&P 500

    3,825.33
    +39.95 (+1.06%)
     
  • DOW

    31,097.26
    +321.83 (+1.05%)
     
  • CRUDE OIL

    108.46
    +2.70 (+2.55%)
     
  • GOLD FUTURES

    1,812.90
    +5.60 (+0.31%)
     
  • NIKKEI 225

    25,935.62
    -457.42 (-1.73%)
     
  • HANG SENG

    21,859.79
    -137.10 (-0.62%)
     
  • DAX

    12,813.03
    +29.26 (+0.23%)
     
  • CAC 40

    5,931.06
    +8.20 (+0.14%)
     

Frasers Group's (LON:FRAS) investors will be pleased with their solid 135% return over the last three years

  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Frasers Group plc (LON:FRAS) share price has soared 135% in the last three years. Most would be happy with that. In the last week the share price is up 2.2%.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Frasers Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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 three years of share price growth, Frasers Group actually saw its earnings per share (EPS) drop 57% per year. In this instance, recent extraordinary items impacted the earnings.

This means it's unlikely the market is judging the company based on earnings growth. Therefore, we think it's worth considering other metrics as well.

Do you think that shareholders are buying for the 2.4% per annum revenue growth trend? We don't. So truth be told we can't see an easy explanation for the share price action, but perhaps you can...

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

It's good to see that Frasers Group has rewarded shareholders with a total shareholder return of 26% in the last twelve months. That's better than the annualised return of 17% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting