Update: Wabtec (NYSE: WAB) shares gained 13% last year

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "There is no doubt that an investment in the stock exchange is A really great way to build wealth, but not every stock you buy will do as well as the overall market Wabtec Corporation (NYSE: WAB), the stock price rose last year, but its 13% gain lagged the market return. When you zoom out, the stock is real Low 5.0% in the past three years. "Data-reactid =" 27 "> There's no doubt that investing in the stock market is a really great way to build wealth, but not every stock you buy will do as well as the overall market, for example the Wabtec Corporation (NYSE: WAB), the share price rose last year, but its 13% gain is behind market return. When you zoom out, the stock is real Low 5.0% in the past three years.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = " Check out our latest analysis for Wabtec "data-reactid =" 28 "> Check out our latest analysis for Wabtec

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just the underlying business trend. One way to examine how market sentiment has changed over time is to examine the interaction between a company's stock price and earnings per share (EPS).

Wabtec even recorded a 52% drop in earnings per share last year.

We therefore do not believe that investors are paying too much attention to EPS. When earnings per share go down but the stock price goes up, it often means that the market is taking other factors into account.

We doubt that the modest 0.6% dividend yield will do much to support the stock price. However, sales growth of 61% over the previous year would help. We see some companies curtail profits to accelerate sales growth.

The following graphic shows how income and sales have changed over time (you can get the exact values ​​by clicking on the image).

NYSE: WAB Income Statement, January 5, 2020

<p class = "Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "We believe insiders have made significant purchases anyway future earnings will become much more important for the question of whether current shareholders are making money free Consensus forecast report"data-reactid =" 46 "> We think it's positive that insiders have made significant purchases in the past year, but future earnings will become more important when it comes to whether current shareholders are making money, so we recommend that you check this out free Consensus forecast report

What about total shareholder return (TSR)?

We have already explained Wabtec's share price development, but should also mention the total shareholder return (TSR). The TSR is probably a more complete calculation of returns because it takes into account the value of the dividends (as if they had been reinvested) along with the hypothetical value of the discounted capital offered to shareholders. Wabtec's 13% TSR for the year outperformed its share price as dividends were distributed.

Another perspective

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Wabtec shareholders achieved a total return of 13 in the reporting period % But this rate of return lags behind the market, but it is still a profit. In five years, the TSR has decreased by 0.6% a year, in five years, which could be a sign that the business is turning If you want to continue researching this stock, the data on the insider purchase is an obvious starting point Click here to see who bought stocks – and what price they paid."data-reactid =" 50 "> The Wabtec shareholders achieved a total return of 13% during the year. But this return lags behind the market. But after all it is still a profit! Over five years the TSR has been around 0 , 6% decreases annually over a five-year period, which could be a sign that business has turned around. If you want to research this stock further, insider buying data is an obvious starting point. Click here to to see who buys this stock bought stocks – and the price they paid.

<p class = "Canvas-Atom Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "There are many other companies that buy insiders up shares. You probably do Not want to miss that free List of growing companies that buy insiders."data-reactid =" 51 "> There are many other companies where insiders buy shares, you probably do Not want to miss that free List of growing companies that buy insiders.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Please note that the market returns mentioned in this article reflect the market-weighted average returns on stocks currently traded on US stock exchanges."data-reactid =" 52 ">Please note that the market returns mentioned in this article reflect the market-weighted average returns on stocks currently traded on US stock exchanges.

<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com, This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading."data-reactid =" 53 ">If you discover an error that justifies a correction, please contact the editorial team at editorial-team@simplywallst.com. This article from Simply Wall St is general in nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Simply Wall St has no position in the stocks mentioned.

We strive to provide you with long-term, focused research analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Thank you for reading.