Shareholders Of Judges Scientific (LON:JDG) Must Be Happy With Their 272% Total Return
When buying shares in a company, consider the possibility that it could fail and you could lose your money. However, a good company can see its share price rise well over 100%. For example, Judges Scientific plc (LON: JDG) stock is up an impressive 235% over the past five years. Over the past week the stock is up 1.0%.
Check out our latest analysis for Judges Scientific
While markets are a strong pricing mechanism, stock prices reflect investor sentiment, not just underlying business performance. One incomplete but easy way to consider how a company's market perception has changed is to compare the change in earnings per share (EPS) with price movement.
Over the past half decade, Judges Scientific has been profitable. This type of transition can be a turning point that warrants a strong gain, as we have seen here. Since the company was unprofitable five years ago but not three years ago, it's also worth taking a look at the returns for the past three years. In fact, Judges Scientific stock is up 148% in three years. Meanwhile, the EPS has increased by 54% per year. This EPS growth is greater than the average annual increase in the share price of 35% over the same three years. So, you might conclude that the market is a little more cautious about the stock these days.
Below you can see how EPS has changed over time (find out the exact values by clicking the image).
It's probably worth noting that the CEO pays less than the median for companies of similar size. While CEO compensation is always worth reviewing, the really important question is whether the company can grow its profits going forward. It might be worth taking a look at our free Judges Scientific Revenue, Revenue, and Cash Flow Report.
What about dividends?
When looking at investment returns, it is important to consider the difference between the total shareholder return (TSR) and the share price return. While the stock price return only reflects the change in the stock price, the TSR includes the value of dividends (if reinvested) and the benefit of discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture of stocks that pay a dividend. Judges Scientific's TSR has been 272% 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.
We are pleased to announce that Judges Scientific shareholders have received a total return of 19% in one year. This of course also includes the dividend. Even so, the five-year TSR of 30% per year is even better. Potential buyers understandably feel like they have missed the opportunity, but it's always possible that business is still up and running on all cylinders. I find it very interesting to look at the share price as a proxy for business development over the long term. But to really gain insight, we need to consider other information as well. For example, consider the ubiquitous specter of investment risk. We identified 1 warning signs with Judges Scientific and understanding these signs should be part of your investment process.
Of course, you could find a fantastic investment by looking elsewhere. So take a look at this free list of companies we expect to grow their profits.
Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently traded on UK stock 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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