Seven West Media (ASX:SWM) offers shareholders a decent 54% YTD return, up 11% in the past week alone
The easiest way to invest in stocks is to buy exchange-traded funds. But you can dramatically increase your returns by picking above-average stocks. Namely, the Seven West Media Limited (ASX:SWM) the stock price is 54% higher than it was a year ago, much better than the market return of around 7.7% (excluding dividends) during the same period. If he can maintain this outperformance over the long term, investors will do very well! Equally impressive, the stock is up 46% over three years, which also makes long-term shareholders happy.
Given that the stock has added A$111 million to its market capitalization in the last week alone, let’s see if the underlying performance has generated any long-term returns.
Check out our latest analysis for Seven West Media
While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
Seven West Media has gone from a loss to a profit over the past year.
We think the growth looks very promising, so we’re not surprised the market likes it as well. Generally speaking, the inflection point in profitability is a great time to seek out a business closely, lest you miss a profit opportunity.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases over the past year. Even so, future earnings will be far more important to whether current shareholders are making money. It might be interesting to take a look at our free Seven West Media earnings, revenue and cash flow report.
A different perspective
We are pleased to report that Seven West Media shareholders received a 54% year-over-year total shareholder return. This certainly exceeds the loss of about 1.7% per year over the last half-decade. This makes us a little suspicious, but the company may have changed course. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Take for example the ubiquitous specter of investment risk. We have identified 4 warning signs with Seven West Media (at least 2 of which are of concern), and understanding them should be part of your investment process.
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 market-weighted average returns of stocks currently trading on AU exchanges.
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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.