These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But if you choose the right individual stocks, you can make more than that. For example, the Easy Software AG (HMSE:ESY) share price is up 12% in the last 1 year, clearly besting the market return of around 6.2% (not including dividends). So that should have shareholders smiling. We’ll need to follow Easy Software for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.
So let’s assess the underlying fundamentals over the last 1 year and see if they’ve moved in lock-step with shareholder returns.
View our latest analysis for Easy Software
Given that Easy Software only made minimal earnings in the last twelve months, we’ll focus on revenue to gauge its business development. Generally speaking, we’d consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
Over the last twelve months, Easy Software’s revenue grew by 0.3%. That’s not a very high growth rate considering it doesn’t make profits. The modest growth is probably largely reflected in the share price, which is up 12%. That’s not a standout result, but it is solid – much like the level of revenue growth. Given the market doesn’t seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.
You can see below how earnings and revenue have changed over time (find the exact values by clicking on the image).
You can see how its balance sheet has been strengthened (or weakened) over time in this way free interactive graphic.
What About The Total Shareholder Return (TSR)?
We’ve already covered Easy Software’s share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that has been offered to shareholders. We note that Easy Software’s TSR, at 15% is higher than its share price return of 12%. When you consider it hasn’t been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
Easy Software shareholders should be happy with the total gain of 15% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 6.9% in that time. This suggests the company is continuing to win over new investors. It’s always interesting to track price share performance over the longer term. But to understand Easy Software better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 3 warning signs for Easy Software (of which 1 is potentially serious!) you should know about.
Of course Easy Software may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that are currently trading on German exchanges.
Have feedback on this article? Concerned about the content? get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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