Would Shareholders Who Purchased Reitir fasteignafélag hf's (ICE:REITIR) Stock Three Years Be Happy With The Share price Today?

Reitir fasteignafélag hf. (ICE:REITIR) shareholders will doubtless be very grateful to see the share price up 40% 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 33% in the last three years, significantly under-performing the market.

See our latest analysis for Reitir fasteignafélag hf

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 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.

During the three years that the share price fell, Reitir fasteignafélag hf's earnings per share (EPS) dropped by 55% each year. This fall in the EPS is worse than the 13% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 88.89, it's fair to say the market sees a brighter future for the business.

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

Dive deeper into Reitir fasteignafélag hf's key metrics by checking this interactive graph of Reitir fasteignafélag hf's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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 Reitir fasteignafélag hf the TSR over the last 3 years was -29%, 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

Reitir fasteignafélag hf shareholders are down 17% for the year (even including dividends), but the market itself is up 1.6%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% 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 Reitir fasteignafélag hf is showing 6 warning signs in our investment analysis , and 2 of those make us uncomfortable...

Of course Reitir fasteignafélag hf may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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