Advertisement
UK markets close in 2 hours 13 minutes
  • FTSE 100

    7,961.37
    +29.39 (+0.37%)
     
  • FTSE 250

    19,889.34
    +78.68 (+0.40%)
     
  • AIM

    743.54
    +1.43 (+0.19%)
     
  • GBP/EUR

    1.1695
    +0.0026 (+0.23%)
     
  • GBP/USD

    1.2639
    +0.0001 (+0.01%)
     
  • Bitcoin GBP

    55,998.91
    +1,283.75 (+2.35%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,249.94
    +1.45 (+0.03%)
     
  • DOW

    39,759.75
    -0.33 (-0.00%)
     
  • CRUDE OIL

    82.42
    +1.07 (+1.32%)
     
  • GOLD FUTURES

    2,228.10
    +15.40 (+0.70%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,500.54
    +23.45 (+0.13%)
     
  • CAC 40

    8,219.04
    +14.23 (+0.17%)
     

Those who invested in Heineken Holding (AMS:HEIO) three years ago are up 28%

Buying a low-cost index fund will get you the average market return. But across the board there are plenty of stocks that underperform the market. Unfortunately for shareholders, while the Heineken Holding N.V. (AMS:HEIO) share price is up 22% in the last three years, that falls short of the market return. Some buyers are laughing, though, with an increase of 21% in the last year.

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.

See our latest analysis for Heineken Holding

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

ADVERTISEMENT

Heineken Holding was able to grow its EPS at 7.3% per year over three years, sending the share price higher. This EPS growth is remarkably close to the 7% average annual increase in the share price. This suggests that sentiment and expectations have not changed drastically. Au contraire, the share price change has arguably mimicked the EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

It might be well worthwhile taking a look at our free report on Heineken Holding's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Heineken Holding's TSR for the last 3 years was 28%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We're pleased to report that Heineken Holding shareholders have received a total shareholder return of 24% over one year. That's including the dividend. That gain is better than the annual TSR over five years, which is 1.8%. 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Heineken Holding , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Dutch 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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here