How Much Did GPI's(BIT:GPI) Shareholders Earn From Share Price Movements Over The Last Three Years?

While not a mind-blowing move, it is good to see that the GPI SpA (BIT:GPI) share price has gained 11% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 28% in the last three years, falling well short of the market return.

See our latest analysis for GPI

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 unfortunate three years of share price decline, GPI actually saw its earnings per share (EPS) improve by 7.1% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We note that, in three years, revenue has actually grown at a 15% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating GPI further; while we may be missing something on this analysis, there might also be an opportunity.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between GPI's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that GPI's TSR, which was a 23% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

GPI shareholders may not have made money over the last year, but their total loss of 5.5% isn't as bad as the market loss of around 5.5%. Furthermore, the stock lost shareholders 7% per year over three years, so the one-year return was better in a relative sense. It is of course not much comfort to know that the losses have slowed. Shareholders will be hoping for a proper turnaround, no doubt. It's always interesting to track share price performance over the longer term. But to understand GPI better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for GPI you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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