Stock Analysis

How Much Did EIH Associated Hotels'(NSE:EIHAHOTELS) Shareholders Earn From Share Price Movements Over The Last Three Years?

NSEI:EIHAHOTELS
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EIH Associated Hotels Limited (NSE:EIHAHOTELS) shareholders should be happy to see the share price up 28% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 23% in the last three years, significantly under-performing the market.

See our latest analysis for EIH Associated Hotels

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 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 three years that the share price fell, EIH Associated Hotels' earnings per share (EPS) dropped by 3.9% each year. The share price decline of 8.5% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
NSEI:EIHAHOTELS Earnings Per Share Growth August 3rd 2020

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on EIH Associated Hotels' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We've already covered EIH Associated Hotels' share price action, but we should also mention its total shareholder return (TSR). 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. Its history of dividend payouts mean that EIH Associated Hotels' TSR, which was a 22% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

Investors in EIH Associated Hotels had a tough year, with a total loss of 7.7%, against a market gain of about 3.3%. 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. Longer term investors wouldn't be so upset, since they would have made 3.9%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. For instance, we've identified 1 warning sign for EIH Associated Hotels that you should be aware of.

But note: EIH Associated Hotels 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 IN exchanges.

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