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Investors in Knorr-Bremse (ETR:KBX) have seen favorable returns of 97% over the past three years

Simply Wall St · 3d ago

By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. For example, Knorr-Bremse AG (ETR:KBX) shareholders have seen the share price rise 84% over three years, well in excess of the market return (34%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 39% in the last year, including dividends.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the last three years, Knorr-Bremse failed to grow earnings per share, which fell 5.6% (annualized).

So we doubt that the market is looking to EPS for its main judge of the company's value. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Languishing at just 1.8%, we doubt the dividend is doing much to prop up the share price. It could be that the revenue growth of 3.4% per year is viewed as evidence that Knorr-Bremse is growing. In that case, the company may be sacrificing current earnings per share to drive growth, and maybe shareholder's faith in better days ahead will be rewarded.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
XTRA:KBX Earnings and Revenue Growth December 22nd 2025

Knorr-Bremse is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Knorr-Bremse, it has a TSR of 97% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that Knorr-Bremse shareholders have received a total shareholder return of 39% over the last year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 0.8% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Knorr-Bremse better, we need to consider many other factors. For instance, we've identified 1 warning sign for Knorr-Bremse that you should be aware of.

Of course Knorr-Bremse may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges.