Wacker Chemie shareholder return lags 29% behind three-year profit growth

Buying index funds allows investors to approximate average market returns. However, many of us dare to dream big returns and build our own portfolios. for example, Wacker Chemie AG (ETR:WCH) shares are up 75% over the past three years, clearly outpacing a market decline of about 5.7% (not including dividends).

The stock is down 4.5% this week, but it’s worth looking long-term and seeing if historical returns are driven by underlying fundamentals.

See the latest analysis from Wacker Chemie

To quote Buffett, “Ships will sail the world, but the Flat Earth Society will thrive. In the marketplace, there will continue to be a great discrepancy between price and value…” One way to see how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Wacker Chemie achieved compound earnings growth of 112% per annum during the three-year stock rally. The 21% average annual stock price appreciation is actually lower than EPS growth. Therefore, the market appears to have moderated growth expectations somewhat. This cautious sentiment is reflected in the (fairly low) P/E ratio of 4.39.

Here’s how the EPS changed over time (click the image to see the exact values).

Of course, it’s great to see how Wacker Chemie has turned a profit over the years, but the future is more important to shareholders.Now you can see how the balance sheet has strengthened (or weakened) over time freedom interactive graphics.

Dividend

When looking at return on investment, it’s important to consider the following differences: Total shareholder return (TSR) and stock price returnThe stock return reflects only changes in the stock price, while the TSR includes the value of dividends (assuming they have been reinvested) and discounted capital raising or spin-off earnings. It’s no exaggeration to say that the TSR provides a more complete picture of dividend-paying stocks. Wacker Chemie has a TSR of 88% over the past three years, outperforming the price/earnings ratio above. And there are no prizes to speculate that dividend payouts account for the difference primarily!

another point of view

Wacker Chemie’s shareholders have fallen by 13% in 12 months (even including dividends), not far from a market return of -15%. Unfortunately, last year’s performance is a deterioration of an already poor long-term performance, given that it has lost 4% annually over the past five years. Reversing this trend will likely require significant improvements in the underlying performance of companies. It’s always interesting to track stock performance over the long term. However, many other factors need to be considered to better understand Wacker Chemie. To do that, you need to learn: two warning signs We discovered Wacker Chemie (including one that didn’t sit very well with us).

of course Wacker Chemie may not be the best strain to buySo you might want to watch this freedom Collection of growing strains.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the DE exchange.

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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …