The five-year decline in earnings for Aeris Resources ASX:AIS) isn't encouraging, but shareholders are still up 376% over that period

By
Simply Wall St
Published
January 25, 2022
ASX:AIS
Source: Shutterstock

Aeris Resources Limited (ASX:AIS) shareholders have seen the share price descend 21% over the month. But that doesn't change the fact that the returns over the last five years have been very strong. In fact, the share price is 155% higher today. We think it's more important to dwell on the long term returns than the short term returns. Of course, that doesn't necessarily mean it's cheap now. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 37% decline over the last three years: that's a long time to wait for profits.

While the stock has fallen 16% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

Check out our latest analysis for Aeris Resources

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...' 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.

During the five years of share price growth, Aeris Resources moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
ASX:AIS Earnings Per Share Growth January 25th 2022

We know that Aeris Resources has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Aeris Resources will grow revenue in the future.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Aeris Resources' total shareholder return (TSR) and its share price return. 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. Dividends have been really beneficial for Aeris Resources shareholders, and that cash payout contributed to why its TSR of 376%, over the last 5 years, is better than the share price return.

A Different Perspective

It's good to see that Aeris Resources has rewarded shareholders with a total shareholder return of 36% in the last twelve months. However, that falls short of the 37% TSR per annum it has made for shareholders, each year, over five years. 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. Even so, be aware that Aeris Resources is showing 2 warning signs in our investment analysis , you should know about...

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

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