Aspen Pharmacare Holdings (JSE:APN) fell 4.2% on the week as annual returns fell more in line with earnings growth
although Aspen Pharmaceutical Holdings Ltd. (JSE:APN) shareholders may generally be pleased that the stock has underperformed recently, with the share price falling 16% in the last quarter. But at least the stock has risen over the past five years. Unfortunately, its return of 35% is lower than the market return of 51%.
Although Aspen Pharmacare Holdings’ market capitalization has fallen to R3.2b this week, let’s take a look at its fundamental long-term trends to see if they are driving returns.
Check out our latest analysis for Aspen Pharmacare Holdings
While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess the change in sentiment about a company is to compare the earnings per share (EPS) with the share price.
Aspen Pharmacare Holdings has grown earnings per share at an annual rate of 22% over five years. This earnings per share growth is higher than the average annual share price increase of 6%. As a result, the market seems less than enthusiastic about the stock recently.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
this free This interactive report on Aspen Pharmacare Holdings’ earnings, revenue and cash flow is a great place to start if you want to investigate the stock further.
It’s important to consider the total shareholder return as well as the share price return for any given stock. TSR is a return calculation that takes into account the value of cash dividends (assuming any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It’s fair to say that TSR gives a more complete picture of stocks that pay dividends. We note that Aspen Pharmacare Holdings’s TSR over the last 5 years was 45%, which is better than the share price return mentioned above. Dividends paid by companies thus boosted all Shareholder returns.
Aspen Pharmacare Holdings shareholders are down 17% for the year (even including dividends), but the market itself is up 14%. Even though the share prices of quality stocks can sometimes fall, we like to see improvements in a business’s fundamental metrics before getting overly interested. On the bright side, long-term shareholders have made money, growing 8% per year over five years. The recent sell-off could be an opportunity, so it might be worth checking the fundamental data for signs of a longer-term growth trend. 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. For example, we found 1 warning sign for Aspen Pharmacare Holdings You should know this before investing here.
