Empire (TSE: EMP.A) shareholders have achieved a CAGR of 21% over the past five years

The worst outcome after buying shares in a company (assuming there is no leverage) would be if you lost all the money you invested. But when you choose a business that is truly thriving, you can Craft more than 100%. For example, the price of Empire Company Limited (TSE:EMP.A) The stock has grown 140% over the past five years.

With that in mind, it’s worth seeing whether the company’s underlying fundamentals have been driving long-term performance, or if there are any gaps.

See our latest review for Empire

In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. By comparing earnings per share (EPS) and share price changes over time, we can get an idea of ​​how investors’ attitudes toward a company change over time.

Over the past half-decade, Empire has become profitable. Sometimes the onset of profitability is a major inflection point that can signal rapid earnings growth to come, which in turn justifies very strong share price increases. Since the company was not profitable five years ago, but not three years ago, it is also worth taking a look at the returns of the last three years. You can see that Empire’s stock price has risen 30% over the past three years. During the same period, EPS increased by 31% each year. This EPS growth is higher than the average annual share price increase of 9% over the same three years. So you might conclude that the market is a bit more cautious about the stock these days.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

TSX:EMP.A Earnings per share growth February 27, 2022

It’s probably worth noting that we’ve seen significant insider buying over the past quarter, which we view as a positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. This free Empire’s Interactive Earnings, Revenue and Cash Flow Report is a great place to start if you want to dig deeper into the stock.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, based on the assumption that dividends are reinvested. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. It turns out that Empire’s TSR for the last 5 years was 160%, which exceeds the share price return mentioned earlier. This is largely the result of its dividend payments!

A different perspective

Empire delivered a TSR of 14% over the last twelve months. But it was below the market average. It’s probably a good sign that the company has an even better long-term balance sheet, having provided shareholders with an annual TSR of 21% over five years. It may well be a company worth watching, given the continued positive market reception over time. If you want to research this stock further, the insider buying data is an obvious place to start. You can click here to see who bought shares – and the price they paid.

There are many other companies whose insiders buy shares. You probably do do not want to miss this free list of growing companies insiders are buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on CA exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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