Would Shareholders Who Purchased Vita Group's (ASX:VTG) Stock Five Years Be Happy With The Share price Today?

Ideally, your overall portfolio should beat the market average. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term Vita Group Limited (ASX:VTG) shareholders for doubting their decision to hold, with the stock down 58% over a half decade. It's down 1.9% in the last seven days.

See our latest analysis for Vita Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

Looking back five years, both Vita Group's share price and EPS declined; the latter at a rate of 5.5% per year. This reduction in EPS is less than the 16% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The low P/E ratio of 7.66 further reflects this reticence.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

This free interactive report on Vita Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Vita Group the TSR over the last 5 years was -45%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Investors in Vita Group had a tough year, with a total loss of 9.0% (including dividends), against a market gain of about 3.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 8% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Vita Group is showing 2 warning signs in our investment analysis , you should know about...

We will like Vita Group better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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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.
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