Even after rising 12% this past week, Triunfo Participações e Investimentos (BVMF:TPIS3) shareholders are still down 53% over the past five years

By
Simply Wall St
Published
March 21, 2022
BOVESPA:TPIS3
Source: Shutterstock

It's nice to see the Triunfo Participações e Investimentos S.A. (BVMF:TPIS3) share price up 12% in a week. But that is little comfort to those holding over the last half decade, sitting on a big loss. In fact, the share price has declined rather badly, down some 57% in that time. So is the recent increase sufficient to restore confidence in the stock? Not yet. Of course, this could be the start of a turnaround.

The recent uptick of 12% could be a positive sign of things to come, so let's take a lot at historical fundamentals.

View our latest analysis for Triunfo Participações e Investimentos

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.

During five years of share price growth, Triunfo Participações e Investimentos moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.

It could be that the revenue decline of 12% per year is viewed as evidence that Triunfo Participações e Investimentos is shrinking. This has probably encouraged some shareholders to sell down the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
BOVESPA:TPIS3 Earnings and Revenue Growth March 21st 2022

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Triunfo Participações e Investimentos' TSR for the last 5 years was -53%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Triunfo Participações e Investimentos shareholders have received a total shareholder return of 10% over the last year. Of course, that includes the dividend. That certainly beats the loss of about 9% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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 Triunfo Participações e Investimentos is showing 4 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BR exchanges.

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