Yahoo Finance Investors in PG&E (NYSE:PCG) have seen strong returns of 107% over the past three years
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. For example, the PG&E Corporation (NYSE:PCG) share price has soared 106% in the last three years. How nice for those who held the stock! It's down 2.6% in the last seven days.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for PG&E
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During three years of share price growth, PG&E achieved compound earnings per share growth of 43% per year. This EPS growth is higher than the 27% average annual increase in the share price. Therefore, it seems the market has moderated its expectations for growth, somewhat.
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 PG&E has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling PG&E stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
PG&E provided a TSR of 2.4% over the last twelve months. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 1.3% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand PG&E better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for PG&E you should be aware of, and 1 of them doesn't sit too well with us.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
