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By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, FinecoBank Banca Fineco S.p.A. (BIT:FBK) shareholders have seen the share price rise 72% over three years, well in excess of the market return (3.5%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 25%, including dividends.
See our latest analysis for FinecoBank Banca Fineco
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During three years of share price growth, FinecoBank Banca Fineco achieved compound earnings per share growth of 8.0% per year. This EPS growth is lower than the 20% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That's not necessarily surprising considering the three-year track record of earnings growth.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that FinecoBank Banca Fineco has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return 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 generated by a stock. We note that for FinecoBank Banca Fineco the TSR over the last 3 years was 90%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's nice to see that FinecoBank Banca Fineco shareholders have gained 25% (in total) over the last year. And yes, that does include the dividend. That's better than the annualized TSR of 24% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting FinecoBank Banca Fineco on your watchlist. Before deciding if you like the current share price, check how FinecoBank Banca Fineco scores on these 3 valuation metrics.