Announcement: WiseTech Global (ASX: WTC) shares have climbed 555% in the past five years
For many, the main goal of investing in the stock market is to earn spectacular returns. And the highest quality companies can see their stock prices rise dramatically. Just think of the savvy investors who held WiseTech Global Limited (ASX: WTC) over the past five years, when they’ve gained 555%. If that doesn’t make you think about investing for the long term, we don’t know what will. Last week, the share price rose 2.7%.
We love happy stories like this. The company should be really proud of this performance!
See our latest review for WiseTech Global
While the markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just the underlying performance of the company. By comparing earnings per share (EPS) and changes in the share price over time, we can get a sense of how investors’ attitudes towards a company have changed over time.
In five years, WiseTech Global has managed to increase its earnings per share by 68% per year. EPS growth is more impressive than the annual share price gain of 46% over the same period. So it looks like the market isn’t so keen on the stock these days. Of course, with a P / E ratio of 63.35, the market remains bullish.
You can see how EPS has changed over time in the image below (click on the graph to see the exact values).
It’s good to see that there have been some significant insider buys over the past three months. It’s positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. 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 stock price performance, investors should also consider the total shareholder return (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 WiseTech Global, it has a TSR of 561% for the past 5 years. This exceeds the return on its share price that we mentioned earlier. The dividends paid by the company thus boosted the total shareholder return.
A different perspective
WiseTech Global’s TSR for the year was broadly in line with the market average at 29%. Note here that the five-year TSR is more impressive, at 46% per year. Although share price growth has slowed, longer-term history points to a company worth watching. 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. However, be aware that WiseTech Global shows 2 warning signs in our investment analysis , you must know…
If you like to buy 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 market-weighted average returns of stocks currently traded on AU 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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