Tel Aviv Stock Exchange’s (TLV:TASE) Three-Year Earnings Growth Falls Short of 22% Annual Shareholder Return
A simple way to profit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could earn more than that. For instance, The Tel Aviv Stock Exchange Ltd. (TLV: TASE) shareholders have seen the share price increase by 77% in three years, well above the market return (27%, excluding dividends). However, more recent returns haven’t been nearly as impressive, with the stock only returning 26% last year, including dividends.
After a strong gain last week, it’s worth seeing if longer-term returns have been driven by improving fundamentals.
Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly reactive dynamic systems and that investors are not always rational. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
In three years of share price growth, the Tel Aviv Stock Exchange has achieved compound growth in earnings per share of 45% per year. The average annual share price increase of 21% is actually less than EPS growth. So it seems investors have become more cautious about the company over time.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
We know that the Tel Aviv Stock Exchange has improved its results over the past three years, but what does the future hold? This free interactive report on the Tel-Aviv Stock Exchange balance sheet strength is a great place to start, if you want to investigate the stock further.
What about dividends?
It is important to consider the total shareholder return, as well as the stock price return, for a given stock. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. In the case of the Tel-Aviv Stock Exchange, it has a TSR of 82% for the last 3 years. This exceeds the performance of its share price that we mentioned earlier. This is largely the result of its dividend payments!
A different perspective
It’s nice to see that shareholders of the Tel Aviv Stock Exchange have gained 26% (in total) over the past year. This includes the value of the dividend. So this year’s TSR was actually better than the three-year (annualized) TSR by 22%. Given the track record of strong returns over varying time periods, it might be worth putting the Tel Aviv Stock Exchange on your watch list. Is the Tel Aviv Stock Exchange cheap compared to other companies? These 3 recovery measures might help you decide.
If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of companies that have proven that they can increase their profits.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on IL exchanges.
Valuation is complex, but we help make it simple.
Find out if Tel Aviv Stock Exchange is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.