Yahoo Finance Iofina (LON:IOF) shareholders have earned a 23% return over the last year
If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Iofina plc (LON:IOF) share price is 23% higher than it was a year ago, much better than the market decline of around 7.7% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 17% in the last three years.
So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.
View our latest analysis for Iofina
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year Iofina grew its earnings per share (EPS) by 120%. It's fair to say that the share price gain of 23% did not keep pace with the EPS growth. So it seems like the market has cooled on Iofina, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 6.77.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how Iofina has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Iofina's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Iofina shareholders have received a total shareholder return of 23% over the last year. That gain is better than the annual TSR over five years, which is 0.7%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Iofina (1 is a bit unpleasant!) that you should be aware of before investing here.
But note: Iofina may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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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.
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