UK markets closed
  • FTSE 100

    6,915.75
    -26.47 (-0.38%)
     
  • FTSE 250

    22,251.26
    +3.72 (+0.02%)
     
  • AIM

    1,236.50
    -2.54 (-0.21%)
     
  • GBP/EUR

    1.1513
    -0.0009 (-0.08%)
     
  • GBP/USD

    1.3707
    -0.0028 (-0.20%)
     
  • BTC-GBP

    43,523.88
    -675.45 (-1.53%)
     
  • CMC Crypto 200

    1,235.89
    +8.34 (+0.68%)
     
  • S&P 500

    4,128.80
    +31.63 (+0.77%)
     
  • DOW

    33,800.60
    +297.03 (+0.89%)
     
  • CRUDE OIL

    59.34
    -0.26 (-0.44%)
     
  • GOLD FUTURES

    1,744.10
    -14.10 (-0.80%)
     
  • NIKKEI 225

    29,768.06
    +59.08 (+0.20%)
     
  • HANG SENG

    28,698.80
    -309.27 (-1.07%)
     
  • DAX

    15,234.16
    +31.48 (+0.21%)
     
  • CAC 40

    6,169.41
    +3.69 (+0.06%)
     

Introducing Dewhurst (LON:DWHT), A Stock That Climbed 96% In The Last Five Years

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·3-min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Stock pickers are generally looking for stocks that will outperform the broader market. And the truth is, you can make significant gains if you buy good quality businesses at the right price. To wit, the Dewhurst share price has climbed 96% in five years, easily topping the market return of 3.2% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 21% in the last year , including dividends .

See our latest analysis for Dewhurst

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Over half a decade, Dewhurst managed to grow its earnings per share at 0.6% a year. This EPS growth is slower than the share price growth of 14% 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. And that's hardly shocking given the track record of growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Dewhurst's TSR for the last 5 years was 112%, 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

It's good to see that Dewhurst has rewarded shareholders with a total shareholder return of 21% in the last twelve months. And that does include the dividend. That gain is better than the annual TSR over five years, which is 16%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Dewhurst you should be aware of, and 1 of them makes us a bit uncomfortable.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.

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