An Impressive 189 Percent Return Over Three Years for CMCMarkets (LON:CMCX) Investors

Investors of CMCMarkets (LON: CMCX) will be happy with their 189 percent gain over the previous three years.

The worst-case scenario after investing in a company's stock (assuming no leverage) is that you lose all of your money. However, if you invest in a fantastic firm, you may more than double your money. For example, in the previous three years, the share price of CMC Markets plc (LON: CMCX) has increased by 148%. That kind of return is as steadfast as stone. In the previous seven days, it has fallen 2.4 percent.

So, during the previous three years, let's look at the underlying fundamentals to determine whether they've evolved in lockstep with shareholder returns.

'Ships will sail across the globe, but the Flat Earth Society will thrive,' Buffett says. There will continue to be significant price and value disparities in the marketplace...' Comparing the change in profits per share (EPS) with the share price movement is an imprecise but basic technique to examine how the market opinion of a firm has moved.

Over three years, CMC Markets was able to raise its EPS at a rate of 43 percent each year, propelling the stock price upward. The average yearly rise in share price is 35%, which is less than the EPS growth. As a result, it seems that the market has lowered its growth projections significantly. This cautious attitude is reflected in the company's (very low) P/E ratio of 6.82.

The graph below shows how EPS has evolved throughout time (unveil the exact values by clicking on the image).

It's great to see how CMC Markets' earnings have increased over the years, but the future is more essential for shareholders.

How Do Dividends Work？

Investors should assess the overall shareholder return in addition to the share price return (TSR). The TSR includes the value of any spin-offs or discounted capital raisings, as well as any dividends, assuming that dividends are reinvested. It's safe to conclude that the TSR provides a more full view of dividend-paying equities. For the previous three years, CMC Markets has had a TSR of 189 percent. This is more than the previously indicated share price return. This is mostly due to its dividend payouts!

A Different Point of View

CMC Market owners are lost 43 percent year so far (even after dividends), although the market is up 10.0 percent. Keep in mind, however, that even the finest companies may sometimes underperform the market for twelve months. Long-term stockholders, on the other hand, have profited, with an average annual gain of 19% over the last five years. The current sell-off may represent an opportunity, therefore it's worth looking at the underlying data for indicators of a long-term growth tendency. It's always intriguing to look at long-term share price performance. However, to properly comprehend CMC Markets, we must examine several additional elements. Take, for example, hazards. Every firm has them, and we've identified two danger flags for CMC Markets that you should be aware of.