If You Had Bought Kathmandu Holdings (NZSE:KMD) Shares A Year Ago You'd Have A Total Return Of Negative 36%

Kathmandu Holdings Limited (NZSE:KMD) shareholders should be happy to see the share price up 10% in the last quarter. But in truth the last year hasn't been good for the share price. In fact the stock is down 56% in the last year, well below the market return.

Check out our latest analysis for Kathmandu Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Unhappily, Kathmandu Holdings had to report a 90% decline in EPS over the last year. This fall in the EPS is significantly worse than the 56% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult. Indeed, with a P/E ratio of 78.14 there is obviously some real optimism that earnings will bounce back.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Kathmandu Holdings' earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Kathmandu Holdings' share price action, but we should also mention its total shareholder return (TSR). 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 Kathmandu Holdings' TSR, which was a 36% drop over the last year, was not as bad as the share price return.

A Different Perspective

Kathmandu Holdings shareholders are down 36% for the year, but the market itself is up 16%. 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 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. It's always interesting to track share price performance over the longer term. But to understand Kathmandu Holdings better, we need to consider many other factors. For instance, we've identified 2 warning signs for Kathmandu Holdings that you should be aware of.

Kathmandu Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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