Stock Analysis

What Type Of Returns Would Delta Galil Industries'(TLV:DELT) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

TASE:DELG
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It is doubtless a positive to see that the Delta Galil Industries Ltd. (TLV:DELT) share price has gained some 33% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 34% in the last three years, significantly under-performing the market.

Check out our latest analysis for Delta Galil Industries

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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).

Delta Galil Industries saw its share price decline over the three years in which its EPS also dropped, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!

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

earnings-per-share-growth
TASE:DELT Earnings Per Share Growth January 21st 2021

Dive deeper into Delta Galil Industries' key metrics by checking this interactive graph of Delta Galil Industries's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Delta Galil Industries' total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Delta Galil Industries' TSR of was a loss of 31% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

While the broader market gained around 3.4% in the last year, Delta Galil Industries shareholders lost 18%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. 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. 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 Delta Galil Industries is showing 3 warning signs in our investment analysis , and 2 of those are significant...

But note: Delta Galil Industries 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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