Explore Lion Finance Group’s Fair Values from the Community and select yours
Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Don’t believe it? Then look at the Lion Finance Group PLC (LON:BGEO) share price. It’s 735% higher than it was five years ago. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 21% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 15% in 90 days). We love happy stories like this one. The company should be really proud of that performance!
Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.
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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, Lion Finance Group achieved compound earnings per share (EPS) growth of 49% per year. So the EPS growth rate is rather close to the annualized share price gain of 53% per year. Therefore one could conclude that sentiment towards the shares hasn’t morphed very much. In fact, the share price seems to largely reflect the EPS growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Lion Finance Group has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Lion Finance Group’s balance sheet strength is a great place to start, if you want to investigate the stock further.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Lion Finance Group the TSR over the last 5 years was 987%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
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