Shareholders of Nemetschek (ETR: NEM) benefited from an impressive price gain of 288%
The worst outcome, after buying a company’s stock (assuming there is no leverage), would be to lose all the money you invested. But when you choose a business that is truly successful, you can Make more than 100%. For example, the Nemetschek SE (ETR: NEM) The share price has climbed 288% in the past five years. Most would be very happy. It’s also good to see the share price rise 15% in the last quarter.
See our latest review for Nemetschek
To paraphrase Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a weighing machine. An imperfect but reasonable way to gauge how sentiment is changing around a company is to compare earnings per share (EPS) with the stock price.
During the five years of share price growth, Nemetschek achieved compound earnings per share (EPS) growth of 22% per year. This EPS growth is lower than the 31% average annual increase in the share price. This suggests that market participants hold society in the highest regard these days. And that’s hardly shocking given the growth history. This favorable sentiment is reflected in its (quite optimistic) P / E ratio of 71.31.
The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).
Before buying or selling a stock, we always recommend a careful review of historical growth trends, available here.
What about dividends?
In addition to measuring stock price performance, investors should also consider the total shareholder return (TSR). 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 benefit of any capital increase or spin- off updated. Arguably, the TSR gives a more complete picture of the return generated by a stock. As it turns out, Nemetschek’s TSR over the past 5 years was 301%, which exceeds the share price return mentioned earlier. And there’s no price guessing that dividend payments are a big part of the reason for the discrepancy!
A different perspective
Nemetschek shareholders achieved a total return of 3.9% during the year. Unfortunately, this does not match the performance of the market. If we look back over five years, the returns are even better, reaching 32% per year for five years. Maybe the stock price is just taking a break as the company executes its growth strategy. Before deciding if you like the current stock price, check Nemetschek’s scores on these 3 valuation metrics.
If you are like me then you do not want to miss it free list of growing companies that insiders buy.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks that currently trade on the DE stock exchanges.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is 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 material. Simply Wall St has no position in any of the stocks mentioned.
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