Yahoo Finance Investors in Graphic Packaging Holding (NYSE:GPK) have seen strong returns of 155% over the past five years
When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. Long term Graphic Packaging Holding Company (NYSE:GPK) shareholders would be well aware of this, since the stock is up 133% in five years. It's also up 12% in about a month. But the price may well have benefitted from a buoyant market, since stocks have gained 6.1% in the last thirty days.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Graphic Packaging Holding
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Over half a decade, Graphic Packaging Holding managed to grow its earnings per share at 15% a year. So the EPS growth rate is rather close to the annualized share price gain of 18% per year. This indicates that investor sentiment towards the company has not changed a great deal. Rather, the share price has approximately tracked EPS growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how Graphic Packaging Holding has grown profits over the years, but the future is more important for shareholders. This free interactive report on Graphic Packaging Holding's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Graphic Packaging Holding the TSR over the last 5 years was 155%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Graphic Packaging Holding shareholders gained a total return of 13% during the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 21% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Graphic Packaging Holding you should be aware of.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.
