Yahoo Finance Investing in Prime Media Group (ASX:PRT) a year ago would have delivered you a 155% gain
Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right business to buy shares in, you can make more than you can lose. Take, for example Prime Media Group Limited (ASX:PRT). Its share price is already up an impressive 135% in the last twelve months. Also pleasing for shareholders was the 81% gain in the last three months. It is also impressive that the stock is up 107% over three years, adding to the sense that it is a real winner.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Prime Media Group
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Prime Media Group was able to grow EPS by 196% in the last twelve months. It's fair to say that the share price gain of 135% did not keep pace with the EPS growth. So it seems like the market has cooled on Prime Media Group, despite the growth. Interesting. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.15.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Prime Media Group has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Prime Media Group's financial health with this free report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Prime Media Group, it has a TSR of 155% for the last 1 year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We're pleased to report that Prime Media Group shareholders have received a total shareholder return of 155% over one year. Of course, that includes the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 12% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Prime Media Group better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Prime Media Group .
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
