Did Changing Sentiment Drive Singapore Press Holdings’s Share Price Down By 40%?

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Ideally, your overall portfolio should beat the market average. But even the best stock picker will only win with some selections. So we wouldn’t blame long term Singapore Press Holdings Limited (SGX:T39) shareholders for doubting their decision to hold, with the stock down 40% over a half decade.

See our latest analysis for Singapore Press Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 five years over which the share price declined, Singapore Press Holdings’s earnings per share (EPS) dropped by 8.2% each year. Notably, the share price has fallen at 9.8% per year, fairly close to the change in the EPS. This implies that the market has had a fairly steady view of the stock. Rather, the share price change has reflected changes in earnings per share.

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

SGX:T39 Past and Future Earnings, February 22nd 2019
SGX:T39 Past and Future Earnings, February 22nd 2019

It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Singapore Press Holdings the TSR over the last 5 years was -24%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Although it hurts that Singapore Press Holdings returned a loss of 1.8% in the last twelve months, the broader market was actually worse, returning a loss of 3.7%. Of far more concern is the 5.2% p.a. loss served to shareholders over the last five years. This sort of share price action isn’t particularly encouraging, but at least the losses are slowing. The data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.

Singapore Press 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 SG exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.