Some Marine Products Corporation (NYSE:MPX) shareholders are probably rather concerned to see the share price fall 31% over the last three months. In contrast, the return over three years has been impressive. The share price marched upwards over that time, and is now 102% higher than it was. It’s not uncommon to see a share price retrace a bit, after a big gain. The thing to consider is whether the underlying business is doing well enough to support the current price.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed, is to compare the earnings per share (EPS) with the share price.
Marine Products was able to grow its EPS at 29% per year over three years, sending the share price higher. We note that the 26% yearly (average) share price gain isn’t too far from the EPS growth rate. Coincidence? Probably not. This observation indicates that the market’s attitude to the business hasn’t changed all that much. Au contraire, the share price change has arguably mimicked the EPS growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Marine Products has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Marine Products will revenue can grow in the future.
What About Dividends?
As well as measuring the share price return, investors should also consider the 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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Marine Products, it has a TSR of 118% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
It’s nice to see that Marine Products shareholders have received a total shareholder return of 3.1% over the last year. Of course, that includes the dividend. However, the TSR over five years, coming in at 15% per year, is even more impressive. Potential buyers might understandably feel they’ve missed the opportunity, but it’s always possible business is still firing on all cylinders. If you would like to research Marine Products in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
But note: Marine Products may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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 firstname.lastname@example.org. 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.