The Stock's Return Trails Its Earnings Growth
Logitech International's investors have seen their total return on investment rise at a faster pace than earnings growth, with the stock up 139% in five years despite a slower-than-expected share price increase over the past year. The company's compound earnings per share growth of 21% per year is reasonably close to its average annual increase in share price, suggesting that investor sentiment towards the shares hasn't changed much. Logitech International's historical returns have been driven by the underlying fundamentals of the business.
- The disconnect between the stock's return and its earnings growth highlights the importance of considering total shareholder return (TSR) when evaluating a company's performance, as it can provide a more comprehensive view of the investment.
- How will investors react if Logitech International fails to meet their expectations in terms of future earnings growth, potentially affecting the TSR?