Did You Participate In Any Of Abbott Laboratories' (NYSE:ABT) Fantastic 185% Return ?
The maximum amount you can lose on any one stock is 100% (assuming you don't use leverage). But on the plus side, if you buy shares in a quality company at the right price, you can win well over 100%. A good example is Abbott Laboratories (NYSE: ABT), whose share price is up 159% in five years. The 17% increase in the last three months was also gratifying for shareholders. However, this move could have been supported by the rather buoyant market (up 9.1% in 90 days).
Check out our latest analysis for Abbott Laboratories
In his essay, The Superinvestors of Graham-and-Doddsville, Warren Buffett described how stock prices do not always rationally reflect the value of a company. One way to study how market sentiment has changed over time is to examine the interaction between a company's share price and earnings per share (EPS).
During the five year share price growth, Abbott Laboratories achieved average earnings per share (EPS) growth of 2.0% per year. This EPS growth is below the average annual increase in the share price of 21%. So it's fair to assume that the market has a higher opinion of business than it did five years ago. Given its five-year track record of earnings growth, this isn't necessarily surprising. This positive sentiment is reflected in his (fairly optimistic) P / E of 62.53.
In the image below you can see how the EPS has changed over time (click on the graph to see the exact values).
Earnings per share
It's great to see Abbott Laboratories' profits over the years, of course, but the future is more important to shareholders. Take a closer look at Abbott Laboratories' financial health with this free on-balance sheet report.
What about dividends?
It's important to consider total shareholder return as well as the stock price return for a given stock. The TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividend received has been reinvested) and the calculated value of discounted capital increases and carve-outs. It's fair to say that the TSR gives a more complete picture of stocks that pay a dividend. Abbott Laboratories' TSR has been 185% over the past 5 years, exceeding the previously mentioned share price return. The dividends paid by the company have thus increased the total return for shareholders.
It's good to see that Abbott Laboratories has rewarded shareholders with a total return of 38% over the past twelve months. And that includes the dividend. That's better than the 23% annualized return over half a decade, which means the company has been doing better lately. At best, this could suggest some real business momentum, meaning now could be a good time to go deeper. It is always interesting to follow the share price development over the long term. However, to better understand Abbott Laboratories we need to consider many other factors. For example, take risks - Abbott Laboratories has two warning signs that we think you should be aware of.
For those looking to find profitable investments, this free list of growing companies with recent insider buying could be the ticket.
Please note that the market returns reported in this article reflect the market-weighted average returns on stocks currently traded on US exchanges.
This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. We want to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
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