For shareholders LyondellBasell Industries NV (NYSE:LYB) shares fell 11% last month. But the fact remains that the returns over the last three years have been very strong. In fact, the stock has surged 155% in that time. It’s not uncommon for stocks to bounce back a little after a big rally. Ultimately, underlying business performance will determine whether the top is in, or if this is a great buying opportunity.
Long-term performance is good, but with a recent 6.8% pullback, let’s see if the fundamentals match up with the stock.
Read the latest analysis from LyondellBasell Industries.
in his essay Graham and Dodsville superinvestor Warren Buffett explained that stock prices don’t always reasonably reflect the value of a business. One imperfect but simple way to look at how the market’s perception of a company has changed is to compare earnings per share (EPS) changes to stock price movements.
LyondellBasell Industries was able to grow its EPS by 7.4% annually over three years, boosting its stock price. This EPS growth is slower than the stock’s average annual increase of 37%. This indicates that the market is feeling more optimistic about the stock after years of progress. It’s not uncommon to see markets “revalue” stocks after several years of growth.
The image below shows how the EPS tracked over time (click image for more details).
It’s always a good idea to study the historical growth trends before buying or selling stocks.
What is the dividend?
When looking at return on investment, it’s important to consider the following differences: Total shareholder return (TSR) and stock price returnTSR incorporates the value of spin-off or discounted capital raising along with dividends, based on the assumption that dividends are reinvested. It’s no exaggeration to say that the TSR provides a more complete picture of dividend-paying stocks. As it happens, LyondellBasell Industries has a TSR of 209% over the past three years, beating the stock return mentioned above. This is primarily a result of dividend payments!
another point of view
It’s a shame that LyondellBasell Industries lost 5.7% over the last 12 months, but the broader market is actually worse, returning a loss of 8.3%. Of course, long-term returns are much more important, and the good news is that we’ve been getting 2% returns each year over five years. The business may only be facing short-term problems, but shareholders should pay attention to the fundamentals. It’s always interesting to track stock performance over time. However, many other factors must be considered to better understand LyondellBasell Industries. for example, Four Warning Signs from LyondellBasell Industries What you should know.
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Please note that the market returns quoted in this article reflect market-weighted average returns for stocks currently traded on US exchanges.
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To find out if LyondellBasell Industries may be overrated or underrated, check out our comprehensive analysis, including: Fair value estimates, risks and warnings, dividends, insider trading and financial health.
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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …