Tradeweb Markets (NASDAQ:TW) shareholders have earned a 24% CAGR over the last five years
Tradeweb Markets TW | 131.26 131.26 | -0.94% 0.00% Pre |
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. Long term Tradeweb Markets Inc. (NASDAQ:TW) shareholders would be well aware of this, since the stock is up 191% in five years. It's also good to see the share price up 15% over the last quarter. But this could be related to the strong market, which is up 9.4% in the last three months.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
View our latest analysis for Tradeweb Markets
There is no denying that markets are sometimes efficient, but prices do not always reflect 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 five years of share price growth, Tradeweb Markets actually saw its EPS drop 72% per year.
Essentially, it doesn't seem likely that investors are focused on EPS. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead.
The modest 0.4% dividend yield is unlikely to be propping up the share price. In contrast revenue growth of 13% per year is probably viewed as evidence that Tradeweb Markets is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Tradeweb Markets is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Tradeweb Markets will earn in the future (free analyst consensus estimates)
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Tradeweb Markets, it has a TSR of 198% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Tradeweb Markets' TSR for the year was broadly in line with the market average, at 32%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 24%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. Before deciding if you like the current share price, check how Tradeweb Markets scores on these 3 valuation metrics.
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.
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.