Reflecting on LandMark Optoelectronics' (GTSM:3081) Share Price Returns Over The Last Three Years

While not a mind-blowing move, it is good to see that the LandMark Optoelectronics Corporation (GTSM:3081) share price has gained 24% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 21% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

View our latest analysis for LandMark Optoelectronics

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 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.

LandMark Optoelectronics saw its EPS decline at a compound rate of 3.3% per year, over the last three years. The share price decline of 7% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. Of course, with a P/E ratio of 58.86, the market remains optimistic.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

Dive deeper into LandMark Optoelectronics' key metrics by checking this interactive graph of LandMark Optoelectronics'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). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for LandMark Optoelectronics the TSR over the last 3 years was -17%, 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

While the broader market gained around 31% in the last year, LandMark Optoelectronics shareholders lost 2.3% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.6% per year over five years. 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. Case in point: We've spotted 1 warning sign for LandMark Optoelectronics 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 TW exchanges.

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