Investing in shares or stock or equity should be done with a long term view, this is because historically, the stock market outperforms all other asset classes particularly the traditional asset classes being T-Bills and bonds in the long term, beating inflation and recording significant returns.
The stock market is known to record over 110% returns on equity investments (capital appreciation) during bullish market periods which lasts averagely for four (4) years.
To realise or achieve significant capital appreciation or gains in share or equity price, investors are advised to continuously invest in the stock market for not less than five (5) years.
Hence, investments into a particular equity for at least five (5) years is ample time to assess its performance, at least over the medium-term.
In this write-up, the five year performance of listed equity of State-Owned Bank, GCB, will be analysed looking at its market capitalization, volume-weighted average price (VWAP) and earnings per share, price-earning ratio (P/E ratio).
EPS
Earnings per share (EPS) is used to evaluate a company’s profitability and potential for growth in earnings. It is a measure of how much profit a company generates per share.
The higher the EPS, the more profitable a company is and the more attractive it is to investors.
GCB has over the last five years (including the 8 months period of 2023), recorded high EPS above the overall average EPS of the various financial companies listed on the GSE.
Norvanreport