Recent 11% pullback isn't enough to hurt long-term Santacruz Silver Mining (CVE:SCZ) shareholders, they're still up 274% over 5 years

Santacruz Silver Mining Ltd. (CVE:SCZ) shareholders have seen the share price descend 23% over the month. But that doesn't change the fact that the returns over the last five years have been very strong. We think most investors would be happy with the 274% return, over that period. We think it's more important to dwell on the long term returns than the short term returns. Of course, that doesn't necessarily mean it's cheap now.

While the stock has fallen 11% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

See our latest analysis for Santacruz Silver Mining

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the last half decade, Santacruz Silver Mining became profitable. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. 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. We can see that the Santacruz Silver Mining share price is down 17% in the last three years. Meanwhile, EPS is up 169% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -6% per year.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Santacruz Silver Mining's earnings, revenue and cash flow.

A Different Perspective

Santacruz Silver Mining shareholders gained a total return of 11% during the year. But that was short of the market average. On the bright side, the longer term returns (running at about 30% a year, over half a decade) look better. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Santacruz Silver Mining better, we need to consider many other factors. For instance, we've identified 3 warning signs for Santacruz Silver Mining that you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com