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Investors Who Bought Becker Milk (TSE:BEK.B) Shares Five Years Ago Are Now Down 18%

Simply Wall St

The main aim of stock picking is to find the market-beating stocks. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in The Becker Milk Company Limited (TSE:BEK.B), since the last five years saw the share price fall 18%. The silver lining is that the stock is up 1.1% in about a week.

View our latest analysis for Becker Milk


During the unfortunate half decade during which the share price slipped, Becker Milk actually saw its earnings per share (EPS) improve by 86% per year. So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock. Alternatively, growth expectations may have been unreasonable in the past.

It's strange to see such muted share price performance despite sustained growth. Perhaps a clue lies in other metrics.

We note that the dividend has remained healthy, so that wouldn't really explain the share price drop. However, revenue has declined at a compound annual rate of 6.2% per year. With dividends up, but revenue down, some investors might be concluding that the company is no longer growing.


TSX:BEK.B Income Statement, October 26th 2019


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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Becker Milk the TSR over the last 5 years was 6.6%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Becker Milk shareholders are up 7.8% for the year (even including dividends) . But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 1.3% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. Before forming an opinion on Becker Milk you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.



