El-Mor Electric Installation & Services (1986) (TLV:ELMR) Share Prices Have Dropped 11% In The Last Three Years

While not a mind-blowing move, it is good to see that the El-Mor Electric Installation & Services (1986) Ltd. (TLV:ELMR) share price has gained 16% in the last three months. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 11% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

View our latest analysis for El-Mor Electric Installation & Services (1986)

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.

Although the share price is down over three years, El-Mor Electric Installation & Services (1986) actually managed to grow EPS by 9.1% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Alternatively, growth expectations may have been unreasonable in the past.

It's strange to see such muted share price performance despite sustained growth. Perhaps a clue lies in other metrics. Therefore, we should look at some other metrics to try to understand why the market is disappointed.

We note that the dividend seems healthy enough, so that probably doesn't explain the share price drop. We like that El-Mor Electric Installation & Services (1986) has actually grown its revenue over the last three years. But it's not clear to us why the share price is down. It might be worth diving deeper into the fundamentals, lest an opportunity goes begging.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at El-Mor Electric Installation & Services (1986)'s financial health with this free report on its balance sheet.

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 El-Mor Electric Installation & Services (1986) the TSR over the last 3 years was 3.3%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

El-Mor Electric Installation & Services (1986) shareholders have gained 3.6% over twelve months (even including dividends). This isn't far from the market return of 3.8%. Most would be happy with a gain, and it helps that the year's return is actually better than the average return of 1.1% over the last three years, implying that the company is doing better recently. It's good to see the uptick, although the business fundamentals will need to move in the right direction if the company is to sustain the rise. 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. Case in point: We've spotted 4 warning signs for El-Mor Electric Installation & Services (1986) you should be aware of, and 1 of them makes us a bit uncomfortable.

But note: El-Mor Electric Installation & Services (1986) may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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