NetherlandsConstruction
ENXTAM:FUR
The 16% return this week takes Fugro's (AMS:FUR) shareholders one-year gains to 78%
Simply Wall St
Simply Wall St
PublishedOctober 31, 2022
ENXTAM:FUR
If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the Fugro N.V. (AMS:FUR) share price is up 78% in the last 1 year, clearly besting the market decline of around 28% (not including dividends). That's a solid performance by our standards! Fugro hasn't been listed for long, so it's still not clear if it is a long term winner.
Since the stock has added €202m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Our analysis indicates that FUR is potentially undervalued!
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
During the last year Fugro grew its earnings per share, moving from a loss to a profit.
When a company is just on the edge of profitability it can be well worth considering other metrics in order to more precisely gauge growth (and therefore understand share price movements).
We think that the revenue growth of 20% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
earnings-and-revenue-growth
ENXTAM:FUR Earnings and Revenue Growth October 31st 2022
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Fugro in this interactive graph of future profit estimates.
A Different Perspective
Fugro boasts a total shareholder return of 78% for the last year. The more recent returns haven't been as impressive as the longer term returns, coming in at just 15%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with Fugro .
Fugro is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NL exchanges.