How Much Did Iress'(ASX:IRE) Shareholders Earn From Share Price Movements Over The Last Five Years?

For many, the main point of investing is to generate higher returns than the overall market. But every investor is virtually certain to have both over-performing and under-performing stocks. At this point some shareholders may be questioning their investment in Iress Limited (ASX:IRE), since the last five years saw the share price fall 17%. Furthermore, it's down 13% in about a quarter. That's not much fun for holders.

Check out our latest analysis for Iress

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 five years over which the share price declined, Iress' earnings per share (EPS) dropped by 1.7% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 4% per year, over the period. This implies that the market was previously too optimistic about the stock.

You can see below how EPS has changed over time (discover 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. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Iress' TSR for the last 5 years was 1.0%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Iress shareholders are up 7.5% for the year (even including dividends). Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 0.2% over half a decade This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Iress better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Iress (of which 1 is a bit unpleasant!) you should know about.

Iress 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.

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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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