Those who invested in Charles Schwab (NYSE:SCW) three years ago are up 110%
The maximum you can lose on any stock (assuming you are not using leverage) is 100% of your money. But when you choose a business that is truly thriving, you can Craft more than 100%. For example, the The Charles Schwab Company (NYSE: SCHW) the stock price is up 101% over the past three years. How good for those who held the stock! Shareholders also appreciated the 12% gain over the past three months.
So let’s assess the underlying fundamentals over the past 3 years and see if they have moved in step with shareholder returns.
See our latest analysis for Charles Schwab
In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
Charles Schwab was able to increase its EPS by 4.7% per year over three years, driving up the share price. This EPS growth is less than the average annual share price increase of 26%. It is therefore fair to assume that the market has a better opinion of the company than three years ago. That’s not necessarily surprising given three years of earnings growth.
The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).
We consider it positive that insiders have made significant purchases over the past year. Even so, future earnings will be far more important to whether current shareholders are making money. Before buying or selling a stock, we always recommend a careful review of historical growth trends, available here.
What about dividends?
In addition to measuring share price performance, investors should also consider total shareholder return (TSR). While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. Note that for Charles Schwab the TSR over the last 3 years was 110%, which is better than the stock market return mentioned above. This is largely the result of its dividend payments!
A different perspective
While it was certainly disappointing to see Charles Schwab shares down 2.4% throughout the year, it wasn’t nearly as bad as the market’s 22% loss. Longer-term investors wouldn’t be so upset, as they would have gained 11%, every year, over five years. At best, the past year is only a temporary breach on the path to a brighter future. It is always interesting to follow the evolution of the share price over the long term. But to better understand Charles Schwab, we must consider many other factors. Example: we have identified 1 warning sign for Charles Schwab you should be aware.
If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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