Compass Group (LON:CPG) delivers shareholders 13% return over 1 year, surging 5.4% in the last week alone
These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. To wit, the Compass Group PLC (LON:CPG) share price is 12% higher than it was a year ago, much better than the market decline of around 2.1% (not including dividends) in the same period. That's a solid performance by our standards! The longer term returns have not been as good, with the stock price only 0.5% higher than it was three years ago.
Since it's been a strong week for Compass Group shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for Compass Group
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 year Compass Group grew its earnings per share, moving from a loss to a profit.
When a company is just on the edge of profitability it can be well worth considering other metrics in order to more precisely gauge growth (and therefore understand share price movements).
We are skeptical of the suggestion that the 1.0% dividend yield would entice buyers to the stock. We think that the revenue growth of 32% could have some investors interested. We do see some companies suppress earnings in order to accelerate revenue growth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Compass Group is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Compass Group stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
It's good to see that Compass Group has rewarded shareholders with a total shareholder return of 13% in the last twelve months. That's including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 3% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Is Compass Group cheap compared to other companies? These 3 valuation measures might help you decide.
Of course Compass Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.
