Investing in Cargotec (HEL: CGCBV) a year ago would have given you a gain of 52%

If you want to accumulate wealth in the stock market, you can do so by purchasing an index fund. But you can do better than that by choosing better-than-average stocks (as part of a diversified portfolio). For example, the Cargotec Company The share price (HEL: CGCBV) has risen 48% over the past year, significantly outperforming the market yield by around 17% (excluding dividends). This should therefore make shareholders smile. And shareholders have performed well over the long term as well, with an increase of 35% over the past three years.

So let’s take a look at the underlying fundamentals over the past year and see if they have moved in step with shareholder returns.

Check out our latest review for Cargotec

It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying business performance. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Cargotec has boasted of truly magnificent BPA growth over the past year. This remarkable rate of growth may not be sustainable, but it remains impressive. We therefore expect the share price to rise. Strong growth like this can be evidence of a fundamental inflection point in the business, making it a good time to take a closer look at the stock.

The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).

HLSE: CGCBV Growth in earnings per share November 22, 2021

We know Cargotec has improved its financial results over the past three years, but what does the future hold? Take a closer look at Cargotec’s financial health with this free report on its balance sheet.

What about dividends?

In addition to measuring stock price performance, investors should also consider the total shareholder return (TSR). TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any discounted capital increase and spin-offs. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. We note that for Cargotec, the TSR over the past year was 52%, which is better than the share price return mentioned above. And there’s no price guessing that dividend payments are a big part of the reason for the discrepancy!

A different perspective

It is good to see that Cargotec has rewarded its shareholders with a total shareholder return of 52% over the past twelve months. This includes the dividend. This is better than the 7% annualized return over half a decade, which implies that the company has been doing better recently. At the best of times, this can portend real business momentum, implying that now may be a good time to dig deep. It is always interesting to follow the evolution of stock prices over the long term. But to understand Cargotec better, there are many other factors that we need to consider. Concrete example: we have spotted 3 warning signs for Cargotec you should be aware of it, and one of them doesn’t suit us very well.

Sure Cargotec may not be the best stock to buy. So you might want to see this free collection of growth stocks.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks that currently trade on the FI exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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