Lundin Mining Sees 5-Year Earnings Decline, But Shareholders Still Up 167%
When it comes to investing in companies, there’s always a risk of losing money. However, if you choose a company that is thriving, the rewards can be substantial. Lundin Mining Corporation (TSE:LUN) is a prime example, with its share price soaring 126% over the past five years. Despite a recent 31% increase in share price over the last quarter, the company has seen a decline of CA$381m in market cap this week. Let’s delve deeper into the fundamental trends of Lundin Mining to understand the driving forces behind these returns.
Warren Buffett once said, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ This sentiment rings true when we look at the interaction between a company’s share price and its earnings per share (EPS). Lundin Mining’s earnings per share have been decreasing by 9.2% annually, despite the strong share price performance over the past five years. This discrepancy suggests that the market may not be valuing the company based on its earnings growth.
On the flip side, Lundin Mining’s revenue has been steadily growing at a compound rate of 15% over the same period. This growth trajectory indicates that the company may be prioritizing revenue growth over EPS growth at the moment. It’s also worth noting that the CEO’s remuneration is more modest compared to other CEOs in similarly capitalized companies, which is a positive sign for investors.
When considering total shareholder return (TSR), which includes dividends and other benefits, Lundin Mining has delivered a TSR of 167% over the past five years, surpassing the share price return. This significant TSR is largely attributed to the company’s dividend payments. In the last twelve months alone, shareholders have enjoyed a TSR of 55%, including dividends, indicating a positive momentum in the company’s performance.
While the one-year TSR outperforms the five-year TSR, suggesting improved stock performance in recent times, it’s essential to remain cautious. Lundin Mining does show 2 warning signs in investment analysis, one of which is significant. Investors should conduct thorough research and consider all factors before making investment decisions. As always, it’s advisable to seek professional financial advice tailored to your individual circumstances.
If you’re interested in exploring investment opportunities alongside management, check out our free list of undervalued companies with attractive valuations. For more personalized advice and insights, feel free to reach out to our editorial team at editorial-team@simplywallst.com. Remember, while our analysis provides historical data and forecasts, it does not constitute financial advice. We aim to offer unbiased, long-term focused analysis to assist investors in making informed decisions.