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Shareholders Of Weir Group (LON:WEIR) Must Be Happy With Their 152% Total Return

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of The Weir Group PLC (LON:WEIR) stock is up an impressive 125% over the last five years. On top of that, the share price is up 28% in about a quarter. But this could be related to the strong market, which is up 12% in the last three months.

View our latest analysis for Weir Group

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

We know that Weir Group has been profitable in the past. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. So we might find other metrics can better explain the share price movements.

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On the other hand, Weir Group's revenue is growing nicely, at a compound rate of 7.6% over the last five years. In that case, the company may be sacrificing current earnings per share to drive growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

Weir Group is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Weir Group will earn in the future (free analyst consensus estimates)

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Weir Group's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Weir Group shareholders, and that cash payout contributed to why its TSR of 152%, over the last 5 years, is better than the share price return.

A Different Perspective

It's nice to see that Weir Group shareholders have received a total shareholder return of 39% over the last year. That gain is better than the annual TSR over five years, which is 20%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Weir Group better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Weir Group you should be aware of, and 1 of them is a bit unpleasant.

But note: Weir Group 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.

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 (at) simplywallst.com.