How much have HomeChoice International (JSE: HIL) shareholders made from stock price movements over the past three years?
HomeChoice International plc (JSE: HIL) Shareholders should be happy to see the stock price rise 16% last month. But that doesn’t help the fact that the three-year return is less impressive. In fact, the stock price has fallen 44% over the past three years, well below market performance.
See our latest review for HomeChoice International
In his essay Graham-and-Doddsville super-investors Warren Buffett described how stock prices don’t always rationally reflect a company’s value. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).
HomeChoice International has seen its EPS drop at a compound rate of 32% per year over the past three years. This drop in EPS is worse than the compounded annual drop in the stock price of 18%. So, despite the previous disappointment, shareholders must have some confidence that the situation will improve, in the longer term.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
It’s probably worth noting that CEOs are paid less than the median in companies of similar size. But while CEO pay is still worth checking out, the really important question is whether the company can increase profits in the future. This free HomeChoice International’s interactive Profit, Revenue and Cash Flow report is a great place to start if you want to delve deeper into the stock.
What about the Total Shareholder Return (TSR)?
We would be remiss not to mention the difference between HomeChoice International total shareholder return (TSR) and its share price return. TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any capital increase and discounted spin-off. The dividends have been really good for HomeChoice International shareholders, and this cash payment explains why its total shareholder loss of 40%, over the past 3 years, is not as bad as the price performance of the company. ‘action.
A different perspective
While the broader market gained around 23% last year, HomeChoice International shareholders lost 5.0%. Even good stock prices drop sometimes, but we want to see improvements in the fundamentals of a business, before we get too interested. Sadly, last year’s performance capped a bad run, with shareholders facing a total loss of 1.6% per year over five years. We are aware that Baron Rothschild has said that investors should “buy when there is blood in the streets”, but we caution that investors must first ensure that they are buying a high quality business. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really understand better, we have to take other information into account as well. For example, we discovered 2 warning signs for HomeChoice International (1 is significant!) That you should know before investing here.
If you are like me then you do not want to miss it free list of growing companies that insiders buy.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on the ZA exchanges.
If you are looking for stocks to buy, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
*Interactive Brokers Ranked Least Expensive Broker By StockBrokers.com Online Annual Review 2020
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.