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When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. One great example is Lotus Bakeries NV (EBR:LOTB) which saw its share price drive 146% higher over five years. The last week saw the share price soften some 3.3%.
See our latest analysis for Lotus Bakeries
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Over half a decade, Lotus Bakeries managed to grow its earnings per share at 18% a year. So the EPS growth rate is rather close to the annualized share price gain of 20% per year. That suggests that the market sentiment around the company hasn't changed much over that time. In fact, the share price seems to largely reflect the EPS growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Lotus Bakeries's key metrics by checking this interactive graph of Lotus Bakeries's earnings, revenue and cash flow.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Lotus Bakeries's TSR for the last 5 years was 155%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Although it hurts that Lotus Bakeries returned a loss of 1.2% in the last twelve months, the broader market was actually worse, returning a loss of 5.9%. Longer term investors wouldn't be so upset, since they would have made 21%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. Is Lotus Bakeries cheap compared to other companies? These 3 valuation measures might help you decide.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).