Those who invested in WiseTech Global (ASX:WTC) five years ago are up 747%

WiseTech Global Limited (ASX:WTC) shareholders may be worried after seeing the stock price drop 13% in the last quarter. But that doesn’t call into question the fantastic long-term performance (measured over five years). In fact, during this period, the stock price rose 739%. Impressive! So we don’t think the recent share price decline means its story is a sad one. Of course, what matters most is whether the company can sustainably improve, thus justifying a higher price. We are really pleased to see such a great share price performance for investors.

So let’s assess the underlying fundamentals over the past 5 years and see if they have moved in step with shareholder returns.

See our latest analysis for WiseTech Global

Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are dynamic systems that are too reactive and that investors are not always rational. An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.

In half a decade, WiseTech Global has managed to increase its earnings per share by 56% per year. This makes EPS growth particularly close to annual share price growth of 53%. Therefore, one could conclude that sentiment towards equities has not changed much. Indeed, it would seem that the share price reacts to BPA.

The company’s earnings per share (over time) is shown in the image below (click to see exact numbers).

ASX: WTC earnings per share growth April 17, 2022

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. This free WiseTech Global’s Interactive Earnings, Revenue and Cash Flow Report is a great place to start if you want to do more research on the stock.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. It turns out that WiseTech Global’s TSR for the past 5 years was 747%, which exceeds the share price return mentioned earlier. And there’s no price guessing that dividend payouts largely explain the divergence!

A different perspective

Good to see that WiseTech Global has rewarded shareholders with a total shareholder return of 46% over the past twelve months. And that includes the dividend. That said, the five-year TSR of 53% per year is even better. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. For example, we found 1 warning sign for WiseTech Global which you should be aware of before investing here.

There are many other companies whose insiders buy shares. You probably do do not want to miss this free list of growing companies insiders are buying.

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

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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