After buying stock in a company, the worst outcome (assuming no leverage) is to lose all the money you put into it. But on a lighter note, a good company can see its stock price rise well over 100%.long term Equifax Co., Ltd. (New York Stock Exchange:EFX) Shareholders would be well aware of this, as the share price is up 103% in five years. And in the last month, the stock has increased 17%. We note that Equifax recently reported financial results. Luckily, we have the latest revenue and profit numbers available. Our report.
On the back of a solid seven-day performance, let’s take a look at how the company’s fundamentals have played a role in driving long-term shareholder returns.
See our latest analysis for Equifax.
Markets are powerful pricing mechanisms, but stock prices reflect not only underlying business performance but also investor sentiment. One way he looks at how market sentiment has changed over time is to look at the interaction between a company’s share price and his earnings per share (EPS).
During the five-year period of share price growth, Equifax achieved compound earnings per share (EPS) growth of 2.6% per year. This EPS growth is slower than the 15% annual growth in the share price over the same period. So it’s fair to think the market has a higher valuation for this business than it did five years ago. This isn’t necessarily surprising, given its track record of profit growth over the past five years. This positive sentiment is reflected in the company’s (rather optimistic) P/E ratio of 48.52.
The company’s earnings per share (long-term) are depicted in the image below (click to see the exact numbers).
Perhaps worth noting is that we saw significant insider buying in the last quarter, which we consider a positive. Having said that, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling stocks, we always recommend that you carefully research the following points: Past growth trends can be viewed here..
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). Whereas the price/earnings ratio 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. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. We note that Equifax’s TSR over the last five years was 112%, which is better than the share price return mentioned above. And there’s no kudos to speculating that dividend payments are the main explanation for the divergence.
different perspective
Equifax shareholders are up 3.3% for the year (even including dividends). However, this was below the market average. On the bright side, the long-term returns (running at around 16% per annum over five years) look better. Perhaps the stock is taking a breather while the company executes its growth strategy. 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.Case in point: we discovered 1 warning sign for Equifax you should know.
Equifax isn’t the only stock that insiders are buying.So take a look at this free A list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our 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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.