Gentrack Group Limited (NZSE:GTK) shareholders should be happy to see the share price up 19% in the last month. But that isn't much consolation for the painful drop we've seen in the last year. During that time the share price has plummeted like a stone, down 72%. Arguably, the recent bounce is to be expected after such a bad drop. The real question is whether the company can turn around its fortunes.
See our latest analysis for Gentrack Group
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unhappily, Gentrack Group had to report a 121% decline in EPS over the last year. This was, in part, due to extraordinary items impacting earnings. And indeed the company lost money over the last twelve months. This fall in the EPS is significantly worse than the 72% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Gentrack Group's key metrics by checking this interactive graph of Gentrack Group's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We've already covered Gentrack Group's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Gentrack Group's TSR, which was a 72% drop over the last year, was not as bad as the share price return.
A Different Perspective
Investors in Gentrack Group had a tough year, with a total loss of 72%, against a market gain of about 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. Before spending more time on Gentrack Group it might be wise to click here to see if insiders have been buying or selling shares.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NZ exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
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August 31, 2020 at 03:00AM
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Gentrack Group (NZSE:GTK) Share Prices Have Dropped 72% In The Last Year - Yahoo Finance
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