EZTEC Empreendimentos e Participações' (BVMF:EZTC3) earnings have declined over three years, contributing to shareholders 49% loss

It is a pleasure to report that the EZTEC Empreendimentos e Participações S.A. (BVMF:EZTC3) is up 55% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 52% in the last three years, falling well short of the market return.

The recent uptick of 8.1% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for EZTEC Empreendimentos e Participações

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

EZTEC Empreendimentos e Participações saw its EPS decline at a compound rate of 11% per year, over the last three years. This reduction in EPS is slower than the 22% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It might be well worthwhile taking a look at our free report on EZTEC Empreendimentos e Participações' earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of EZTEC Empreendimentos e Participações, it has a TSR of -49% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that EZTEC Empreendimentos e Participações has rewarded shareholders with a total shareholder return of 16% in the last twelve months. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 7%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with EZTEC Empreendimentos e Participações , and understanding them should be part of your investment process.

We will like EZTEC Empreendimentos e Participações 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 Brazilian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.