Did Changing Sentiment Drive Bingo Industries's (ASX:BIN) Share Price Down By 16%?

It is doubtless a positive to see that the Bingo Industries Limited (ASX:BIN) share price has gained some 30% in the last three months. But that doesn't change the reality of under-performance over the last twelve months. In fact, the price has declined 16% in a year, falling short of the returns you could get by investing in an index fund.

View our latest analysis for Bingo Industries

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.

During the unfortunate twelve months during which the Bingo Industries share price fell, it actually saw its earnings per share (EPS) improve by 0.6%. It could be that the share price was previously over-hyped. It seems quite likely that the market was expecting higher growth from the stock. But other metrics might shed some light on why the share price is down.

Given the yield is quite low, at 1.6%, we doubt the dividend can shed much light on the share price. Bingo Industries's revenue is actually up 33% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Bingo Industries in this interactive graph of future profit estimates.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Bingo Industries the TSR over the last year was -8.3%, 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

Given that the market gained 5.1% in the last year, Bingo Industries shareholders might be miffed that they lost 8.3% (even including dividends). While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's great to see a nice little 30% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

Bingo Industries is not the only stock that insiders are buying. For those who like to find winning investments 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 AU exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.