J.Jill (NYSE:JILL) sheds 21% this week, as yearly returns fall more in line with earnings growth

J.Jill, Inc. (NYSE:JILL) shareholders might be concerned after seeing the share price drop 24% in the last quarter. But that doesn't change the fact that shareholders have received really good returns over the last five years. It's fair to say most would be happy with 134% the gain in that time. We think it's more important to dwell on the long term returns than the short term returns. Ultimately business performance will determine whether the stock price continues the positive long term trend.

Although J.Jill has shed US$84m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

See our latest analysis for J.Jill

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

During the five years of share price growth, J.Jill moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

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

It is of course excellent to see how J.Jill has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling J.Jill stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

J.Jill shareholders gained a total return of 3.9% during the year. But that return falls short of the market. On the bright side, the longer term returns (running at about 19% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand J.Jill better, we need to consider many other factors. For instance, we've identified 3 warning signs for J.Jill that 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 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.