The worst outcome, after buying a company’s stock (assuming there is no leverage), would be to lose all the money you invested. But on the bright side, if you buy shares of a high quality company for the right price, you can earn well over 100%. Long term Dover Society (NYSE: DOV) Shareholders would be well aware of this, since the stock has risen 116% in five years. Last week, the stock price rose 1.7%.

Check out our latest analysis for Dover

It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. 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).

Over the five years of stock price growth, Dover achieved compound earnings per share (EPS) growth of 6.8% per year. This EPS growth is lower than the average annual increase of 17% in the share price. This suggests that market participants hold society in the highest regard these days. This isn’t necessarily surprising given the track record of five-year earnings growth.

The graph below illustrates the evolution of EPS over time (reveal the exact values ​​by clicking on the image).

NYSE: DOV Growth in earnings per share July 4, 2021

It might be worth taking a look at our free Dover earnings, revenue and cash flow report.

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 spinoff. So, for companies that pay a generous dividend, the TSR is often much higher than the return on the share price. In the case of Dover, it has a TSR of 198% for the past 5 years. This exceeds the return on its share price that we mentioned earlier. This is largely the result of his dividend payments!

A different perspective

It’s good to see that Dover has rewarded its shareholders with a total shareholder return of 58% over the past twelve months. This includes the dividend. As the 1-year TSR is better than the 5-year TSR (the latter standing at 24% per year), it seems that the performance of the stock has improved in recent times. Since the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider, for example, the ever-present specter of investment risk. We have identified 2 warning signs with Dover and understanding them should be part of your investment process.

Of course Dover 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 currently traded on US stock exchanges.

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This Simply Wall St article is general in nature. 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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