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The 40% return delivered to Colonial Motor's (NZSE:CMO) shareholders actually lagged YoY earnings growth

Simply Wall St · 2d ago

The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. For example, the The Colonial Motor Company Limited (NZSE:CMO) share price is up 32% in the last 1 year, clearly besting the market return of around 2.8% (not including dividends). That's a solid performance by our standards! On the other hand, longer term shareholders have had a tougher run, with the stock falling 10.0% in three years.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

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To quote Buffett, '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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Colonial Motor was able to grow EPS by 304% in the last twelve months. This EPS growth is significantly higher than the 32% increase in the share price. So it seems like the market has cooled on Colonial Motor, despite the growth. Interesting.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

earnings-per-share-growth
NZSE:CMO Earnings Per Share Growth December 23rd 2025

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Colonial Motor's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Colonial Motor's TSR for the last 1 year was 40%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Colonial Motor shareholders have received a total shareholder return of 40% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 6%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Colonial Motor better, we need to consider many other factors. For example, we've discovered 3 warning signs for Colonial Motor (2 are potentially serious!) that you should be aware of before investing here.

Colonial Motor is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.

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