Melcor Real Estate Investment Trust's (TSE:MR.UN) earnings have declined over five years, contributing to shareholders 7.8% loss

It's nice to see the Melcor Real Estate Investment Trust (TSE:MR.UN) share price up 15% in a week. But over the last half decade, the stock has not performed well. In fact, the share price is down 40%, which falls well short of the return you could get by buying an index fund.

The recent uptick of 15% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Melcor Real Estate Investment Trust

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 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).

Looking back five years, both Melcor Real Estate Investment Trust's share price and EPS declined; the latter at a rate of 6.2% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 10% per year, over the period. This implies that the market was previously too optimistic about the stock. The less favorable sentiment is reflected in its current P/E ratio of 3.27.

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

Dive deeper into Melcor Real Estate Investment Trust's key metrics by checking this interactive graph of Melcor Real Estate Investment Trust's 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Melcor Real Estate Investment Trust the TSR over the last 5 years was -7.8%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Investors in Melcor Real Estate Investment Trust had a tough year, with a total loss of 14% (including dividends), against a market gain of about 6.3%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.5% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Melcor Real Estate Investment Trust better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Melcor Real Estate Investment Trust (of which 1 is concerning!) you should know about.

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 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.