Reflecting on Park Hotels & Resorts’ (NYSE:PK) Share Price Returns Over The Last Three Years

Park Hotels & Resorts Inc. (NYSE:PK) shareholders will doubtless be very grateful to see the share price up 36% in the last quarter. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 63%. Some might say the recent bounce is to be expected after such a bad drop. After all, could be that the fall was overdone.

View our latest analysis for Park Hotels & Resorts

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. 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.

Over the three years that the share price declined, Park Hotels & Resorts’ earnings per share (EPS) dropped significantly, falling to a loss. Since the company has fallen to a loss making position, it’s hard to compare the change in EPS with the share price change. However, we can say we’d expect to see a falling share price in this scenario.

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

earnings-per-share-growth
NYSE:PK Earnings Per Share Growth August 12th 2020

It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What about the Total Shareholder Return (TSR)?

We’ve already covered Park Hotels & Resorts’ 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. Dividends have been really beneficial for Park Hotels & Resorts shareholders, and that cash payout explains why its total shareholder loss of 52%, over the last 3 years, isn’t as bad as the share price return.

A Different Perspective

Park Hotels & Resorts shareholders are down 54% for the year, but the broader market is up 20%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 15% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example – Park Hotels & Resorts has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Park Hotels & Resorts is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

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