Even though JHSF Participações (BVMF:JHSF3) has lost R$359m market cap in last 7 days, shareholders are still up 186% over 5 years

JHSF Participações S.A. (BVMF:JHSF3) shareholders might be concerned after seeing the share price drop 26% in the last quarter. But that doesn't change the fact that shareholders have received really good returns over the last five years. In fact, the share price is 132% higher today. So while it's never fun to see a share price fall, it's important to look at a longer time horizon. Only time will tell if there is still too much optimism currently reflected in the share price. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 40% drop, in the last year.

Since the long term performance has been good but there's been a recent pullback of 14%, let's check if the fundamentals match the share price.

View our latest analysis for JHSF Participações

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 last half decade, JHSF Participações became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. In fact, the JHSF Participações stock price is 5.9% lower in the last three years. In the same period, EPS is up 16% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -2.0% per year.

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

This free interactive report on JHSF Participações' 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. In the case of JHSF Participações, it has a TSR of 186% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While the broader market lost about 15% in the twelve months, JHSF Participações shareholders did even worse, losing 37% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 23%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand JHSF Participações better, we need to consider many other factors. Even so, be aware that JHSF Participações is showing 4 warning signs in our investment analysis , and 2 of those are potentially serious...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.