Yahoo Finance Southern Cross Electrical Engineering (ASX:SXE) Has Gifted Shareholders With A Fantastic 109% Total Return On Their Investment
When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. For example, long term Southern Cross Electrical Engineering Limited (ASX:SXE) shareholders have enjoyed a 69% share price rise over the last half decade, well in excess of the market return of around 42% (not including dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 1.3% , including dividends .
View our latest analysis for Southern Cross Electrical Engineering
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the last half decade, Southern Cross Electrical Engineering became profitable. That would generally be considered a positive, so we'd expect the share price to be up.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Southern Cross Electrical Engineering has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Southern Cross Electrical Engineering stock, you should check out this FREE detailed 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. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Southern Cross Electrical Engineering the TSR over the last 5 years was 109%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Southern Cross Electrical Engineering shareholders are up 1.3% for the year (even including dividends). But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 16% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Southern Cross Electrical Engineering is showing 3 warning signs in our investment analysis , you should know about...
But note: Southern Cross Electrical Engineering may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
This article by Simply Wall St is general in nature. 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.
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