Victorian Plumbing Group plc (LON:VIC) shareholders have seen the share price fall 15% over the month. But looking back over the past year, the returns have actually been quite pleasing! For the full year, the company easily outperformed an index fund, up 39%.
Although the Victorian Plumbing Group has lost £33m from its market cap this week, let’s take a look at its longer term fundamental trends and see if they have been driving returns.
Check out our latest analysis for the Victorian Plumbing Group
There’s no denying that markets are sometimes efficient, but prices don’t always reflect underlying business performance. An imperfect but simple way to study how a company’s market perception has changed is to compare the change in earnings per share (EPS) to stock price movement.
Last year, the Victorian Plumbing Group even saw its earnings per share fall 38%.
So we don’t think investors are paying too much attention to earnings per share. Since the change in EPS doesn’t seem to correlate with the change in the stock price, it’s worth looking at other metrics.
We doubt that the modest 1.5% dividend yield will provide much support for the share price. Earnings were fairly flat year-over-year, but perhaps a closer look at the data can explain the market’s optimism.
The image below shows how revenue and earnings have evolved over time (you can see more details by clicking on the image).
AIM: VIC Earnings and Revenue Growth, March 22, 2023
We like that insiders have bought stocks over the past 12 months. Even so, future earnings will be far more important to whether current shareholders make money. We therefore recommend checking this out free Report with consensus forecasts
What about dividends?
When looking at investment returns, it’s important to consider the difference between total shareholder return (TSR) and stock price return. The TSR takes into account the value of any demerger or discounted capital increase along with any dividends based on the assumption that the dividends will be reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that the TSR for the Victorian Plumbing Group was 43% over the last year, which is better than the share price return mentioned above. The dividends paid by the company have thus increased the total shareholder return.
A different perspective
Victorian Plumbing Group shareholders should be pleased with the company’s 43% overall profit over the last 12 months, including dividends. That’s better than the recent 3-month gain of 0.5%, which suggests the stock price has been plateauing lately. However, we doubt shareholders would be concerned. It seems that the market is simply waiting for more information because if the company delivers, the stock price will (ultimately) do so. While it’s worth considering the various effects that market conditions can have on the stock price, there are other factors that are even more important. Case in point: We discovered it 1 warning sign for Victorian Plumbing Group you should be aware of this.
The Victorian Plumbing Group isn’t the only stock insiders are buying. So take a look free List of Growing Insider Buying Companies.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on UK stock exchanges.
The assessment is complex, but we help to simplify it.
Find out if Victorian Plumbing Group may be over or undervalued by viewing our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.
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This Simply Wall St article is of a general nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.