If you bought Absolute Software (TSE: ABT) stock a year ago, you could pocket a 128% gain today
Unless you borrow money to invest, the potential losses are limited. But when you choose a truly successful business, you can Make more than 100%. Take for example Absolute Software Corporation (IS: ABT). Its share price has already risen 128% over the past twelve months. It also increased by 19% in about a month. Looking back, the share price is 102% higher than three years ago.
While the markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and changes in the share price over time, we can get an idea of how investor attitudes towards a company have evolved over time. .
Over the past year, Absolute Software has increased its earnings per share (EPS) by 36%. The 128% share price gain certainly outpaced EPS growth. It is therefore fair to assume that the market has a better opinion of the company than a year ago. The fairly generous P / E ratio of 52.23 also testifies to this optimism.
The image below shows how EPS has tracked over time (if you click on the image you can see more detail).
It is of course great to see how Absolute Software has increased its profits over the years, but the future is more important to shareholders. You can see how his track record has strengthened (or weakened) over time in this free interactive graphic.
What about dividends?
When looking at investment performance, it is important to consider the difference between total return to shareholders (TSR) and share price return. While the share price return reflects only the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the profit from any capital increase or spin. -off updated. Arguably, the TSR gives a more complete picture of the return generated by a stock. In the case of Absolute Software, it has a TSR of 135% for the past year. This exceeds the share price return we mentioned earlier. And there’s no price in assuming that dividend payments are a big part of the reason for the discrepancy!
A different perspective
It is nice to see that Absolute Software shareholders have received a total shareholder return of 135% over the past year. This includes the dividend. Given that the one-year TSR is better than the five-year TSR (the latter reaching 22% per year), it would appear that the stock’s performance has improved in recent times. Since the stock price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. While it is worth considering the different impacts that market conditions can have on the share price, other factors are even more important. For example, we have identified 3 warning signs for Absolute Software (1 should not be ignored) that you need to be aware of.
We’ll like Absolute Software better if we see big insider buys. While we wait watch this free list of growing companies with recent and significant insider buying.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the California stock exchanges.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in the mentioned stocks.