Spark Infrastructure Group (ASX: SKI) shareholders posted an 11% gain last year

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We think investing is smart because history shows that stock markets rise over the long term. But not all stocks you buy will perform as well as the overall market. Unfortunately for the shareholders, while the Spark Infrastructure Group (ASX: SKI) the stock price is up 11% last year, which is below the market return. Unfortunately, long-term returns aren’t as good as the stock has fallen 8.9% in the past three years.

See our latest analysis for Spark Infrastructure Group

To quote Buffett, “Ships will go around the world but the Flat Earth Society will thrive. There will always be large gaps between price and value in the market … ”An imperfect but reasonable way to assess how sentiment around a company has changed is to compare earnings per share (EPS) with the share price.

Over the past year, Spark Infrastructure Group increased its earnings per share (EPS) by 30%. It’s fair to say that the 11% gain in the stock price has not kept pace with the growth in EPS. Therefore, it seems that the market is not as excited about Spark Infrastructure Group as it used to be. It could be an opportunity.

You can see how the EPS has changed over time in the image below (click on the graph to see the exact values).

earnings per share growth

It’s good to see that there have been some significant insider buys over the past three months. This is a positive point. On the other hand, we believe that revenue and profit trends are much more meaningful measures of the business. It might be worth taking a look at our free Spark Infrastructure Group Profit, Revenue and Cash Flow Report.

What about dividends?

In addition to measuring the return on the share price, investors should also consider the total return to shareholders (TSR). The TSR incorporates the value of any discounted demerger or capital increase, as well as any dividend, based on the assumption that dividends are reinvested. Arguably, the TSR gives a more complete picture of the return generated by a stock. In the case of Spark Infrastructure Group, it has an 18% TSR for the past year. This exceeds the share price return we mentioned earlier. And there’s no price in assuming that dividend payouts are a big part of the reason for the discrepancy!

A different perspective

Spark Infrastructure Group has provided an 18% TSR over the past twelve months. Unfortunately, this does not match the performance of the market. On the bright side, it’s still a payoff, and it’s actually better than the 7% average return over half a decade. It is possible that returns will improve with company fundamentals. While it is worth considering the different impacts that market conditions can have on the share price, other factors are even more important. For example, we discovered 3 warning signs for Spark Infrastructure Group which you should be aware of before investing here.

Spark Infrastructure Group is not the only one to buy. So take a look at this free list of growing companies with insider buying.

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

This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim 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 information. Simply Wall St has no position in the mentioned stocks.

Do you have any comments on this article? Concerned about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.



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