Lotus Bakeries (EBR:LOTB) shareholders have achieved a CAGR of 25% over the past five years

When you buy a stock, there is always a chance that it will drop 100%. But when you choose a business that’s really thriving, you can do More than 100%. For example, the price of Lotus Bakeries NV (EBR:LOTB) shares have risen an impressive 195% in the last five years. On top of that, the stock price was up 15% in about a quarter.

Let’s take a look at the underlying fundamentals over the long term and see if they have been consistent with shareholder returns.

Our analysis indicates that LOTB is potentially overrated!

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. A flawed but reasonable way to gauge how sentiment around a company has changed is to compare earnings per share (EPS) with the share price.

For half a decade, Lotus Bakeries managed to increase its earnings per share by 8.2% per year. This EPS growth is slower than stock price growth of 24% per year, over the same period. This suggests that market participants hold the company in higher esteem these days. That’s not necessarily surprising considering the five-year track record of earnings growth. This optimism is visible in its rather high P/E ratio of 54.29.

The graph below shows how EPS has changed over time (find out the exact values ​​by clicking on the image).

earnings per share growth
ENXTBR:LOTB Earnings Per Share Growth December 10, 2022

Dig deeper into key Lotus Bakeries metrics by checking out this interactive chart of Lotus Bakeries earnings, revenue and cash flow.

What about dividends?

It is important to take into account the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any discounted spin-offs or capital raises, together with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay generous dividends, the TSR is typically much higher than the stock price return. As it happens, the TSR for Lotus Bakeries over the last 5 years was 205%, which is above the previously mentioned share price performance. The dividends paid by the company have thus boosted the total shareholder return.

a different perspective

It’s good to see that Lotus Bakeries has rewarded shareholders with a total return to shareholders of 14% over the last twelve months. Of course, that includes the dividend. However, the TSR over five years, coming in at 25% per year, is even more impressive. The bearish view would be that the stock is past its best days, but on the other hand, the price could simply be moderating while the business itself continues to function. Before you form an opinion about Lotus Bakeries, you may want to consider these 3 valuation metrics.

But note: Lotus Bakeries may not be the best stock to buy. so take a look at this free list of interesting companies with past earnings growth (and forecast for further growth).

Please note that the market returns quoted in this article reflect the market weighted average returns of shares currently traded on BE exchanges.

Valuation is complex, but we are helping to simplify it.

Find out if lotus bakeries is potentially overvalued or undervalued by consulting our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, internal transactions and financial health.

View the free analysis

This Simply Wall St article is general in nature. We provide feedback based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell any stock, and it does not take into account your goals or financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative material. Simply Wall St does not have a position in any of the mentioned stocks.

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