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Highlights
- Impressive 158% stock growth over five years for Loblaw Companies Limited (TSE:L)
- EPS growth close to yearly share price growth, indicating stable market sentiment
- Total Shareholder Return (TSR) surpasses share price return due to dividends
Investing in shares offers both opportunities and challenges. A flourishing company can lead to impressive financial gains, like the noteworthy journey of Loblaw Companies Limited (TSX:L) which has seen a 158% increase in stock price over the past five years.
When analyzing a company's growth, Benjamin Graham once noted that the market is a "voting machine" in the short term and a "weighing machine" in the long term. One method to assess market sentiment is to compare the earnings per share (EPS) against the share price. Over the last five years, Loblaw Companies has grown its EPS at a rate of 21% annually, which aligns closely with its annual share price growth of 21%. This suggests stability in market sentiment towards the company as the share price appears to respond proportionately to the EPS.
Besides the company’s bottom line improvements, future revenue growth remains a key interest. Analysts' forecasts are readily available in detailed reports.
What About Dividends?
It's essential to factor in total shareholder return (TSR) alongside share price returns for a broader understanding. TSR includes dividends (assuming reinvestment), as well as any spin-offs or discounted capital raisings. Over the last five years, Loblaw Companies achieved a TSR of 178%, surpassing the previously mentioned stock price return, largely due to its dividend contributions!
A Different Perspective
For the most recent year, Loblaw Companies shareholders have witnessed a TSR of 31%, including dividends. This one-year TSR performance marks an improvement over the five-year TSR average of 23% annually, hinting that the business might be gaining momentum.
Although tracking long-term share price performance is insightful, understanding Loblaw Companies requires consideration of other factors, including potential risks. Notably, there are 2 warning signs identified for Loblaw Companies.
