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While BE Semiconductor Industries N.V. (AMS:BESI) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 27% in the last quarter. But over five years returns have been remarkably great. To be precise, the stock price is 302% higher than it was five years ago, a wonderful performance by any measure. So we don’t think the recent decline in the share price means its story is a sad one. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price.
After a strong gain in the past week, it’s worth seeing if longer term returns have been driven by improving fundamentals.
Check out our latest analysis for BE Semiconductor Industries
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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.
Over half a decade, BE Semiconductor Industries managed to grow its earnings per share at 14% a year. This EPS growth is slower than the share price growth of 32% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. And that’s hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 54.58.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into BE Semiconductor Industries’ key metrics by checking this interactive graph of BE Semiconductor Industries’s earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, BE Semiconductor Industries’ TSR for the last 5 years was 375%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
BE Semiconductor Industries shareholders gained a total return of 22% during the year. Unfortunately this falls short of the market return. On the bright side, the longer term returns (running at about 37% a year, over half a decade) look better. It’s quite possible the business continues to execute with prowess, even as the share price gains are slowing. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we’ve identified 1 warning sign for BE Semiconductor Industries that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Dutch 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.