The three-year loss for Healthcare Services Group (NASDAQ:HCSG) shareholders likely driven by its shrinking earnings

Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Healthcare Services Group, Inc. (NASDAQ:HCSG) have had an unfortunate run in the last three years. So they might be feeling emotional about the 64% share price collapse, in that time. And more recent buyers are having a tough time too, with a drop of 24% in the last year. On the other hand the share price has bounced 9.4% over the last week.

The recent uptick of 9.4% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for Healthcare Services Group

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 three years that the share price fell, Healthcare Services Group's earnings per share (EPS) dropped by 25% each year. This fall in EPS isn't far from the rate of share price decline, which was 29% per year. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. Rather, the share price has approximately tracked EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Healthcare Services Group has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Healthcare Services Group will grow revenue in the future.

What About The Total Shareholder Return (TSR)?

We've already covered Healthcare Services Group's 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 Healthcare Services Group's TSR, which was a 61% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

Investors in Healthcare Services Group had a tough year, with a total loss of 24%, against a market gain of about 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. Before spending more time on Healthcare Services Group it might be wise to click here to see if insiders have been buying or selling shares.

Of course Healthcare Services Group 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 American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com