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    Sweco's (STO:SWEC B) earnings growth rate lags the 19% CAGR delivered to shareholders

    Simply Wall St·12/14/2025 06:33:37
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    One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. Just take a look at Sweco AB (publ) (STO:SWEC B), which is up 58%, over three years, soundly beating the market return of 25% (not including dividends).

    While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

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    To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

    Sweco was able to grow its EPS at 10% per year over three years, sending the share price higher. This EPS growth is lower than the 17% average annual increase in the share price. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That's not necessarily surprising considering the three-year track record of earnings growth.

    The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

    earnings-per-share-growth
    OM:SWEC B Earnings Per Share Growth December 14th 2025

    It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on Sweco's earnings, revenue and cash flow.

    What About Dividends?

    As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Sweco the TSR over the last 3 years was 69%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

    A Different Perspective

    Investors in Sweco had a tough year, with a total loss of 11% (including dividends), against a market gain of about 6.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 1.7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Sweco you should be aware of.

    Sweco 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 Swedish exchanges.