A Look At Southern Cross Media Group's (ASX:SXL) Share Price Returns

While not a mind-blowing move, it is good to see that the Southern Cross Media Group Limited (ASX:SXL) share price has gained 26% in the last three months. But the last three years have seen a terrible decline. The share price has sunk like a leaky ship, down 81% in that time. Arguably, the recent bounce is to be expected after such a bad drop. But the more important question is whether the underlying business can justify a higher price still.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

View our latest analysis for Southern Cross Media Group

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 five years of share price growth, Southern Cross Media Group moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So given the share price is down it's worth checking some other metrics too.

Arguably the revenue decline of 5.3% per year has people thinking Southern Cross Media Group is shrinking. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free report showing analyst forecasts should help you form a view on Southern Cross Media Group

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Southern Cross Media Group's total shareholder return (TSR) and its share price change, which we've covered above. 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 Southern Cross Media Group shareholders, and that cash payout explains why its total shareholder loss of 70%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

While the broader market gained around 2.1% in the last year, Southern Cross Media Group shareholders lost 64%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% 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. It's always interesting to track share price performance over the longer term. But to understand Southern Cross Media Group better, we need to consider many other factors. Take risks, for example - Southern Cross Media Group has 3 warning signs (and 2 which can't be ignored) we think you should know about.

There are plenty of other companies that have insiders buying up shares. You probably do 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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