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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But in contrast you can make much more than 100% if the company does well. To wit, the Kier Group plc (LON:KIE) share price has flown 103% in the last three years. Most would be happy with that. In more good news, the share price has risen 29% in thirty days.
Since it's been a strong week for Kier Group shareholders, let's have a look at trend of the longer term fundamentals.
We've discovered 1 warning sign about Kier Group. View them for free.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Kier Group was able to grow its EPS at 13% per year over three years, sending the share price higher. In comparison, the 27% per year gain in the share price outpaces the EPS growth. So it's fair to assume the market has a higher opinion of the business than it did three years ago. 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 Kier Group 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?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Kier Group's TSR for the last 3 years was 114%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's nice to see that Kier Group shareholders have received a total shareholder return of 15% over the last year. That's including the dividend. However, that falls short of the 17% TSR per annum it has made for shareholders, each year, over five years. It's always interesting to track share price performance over the longer term. But to understand Kier Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for Kier Group that you should be aware of.