How Much Did Distell Group Holdings'(JSE:DGH) Shareholders Earn From Share Price Movements Over The Last Five Years?

It is a pleasure to report that the Distell Group Holdings Limited (JSE:DGH) is up 31% in the last quarter. But that doesn't change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 45%, which falls well short of the return you could get by buying an index fund.

See our latest analysis for Distell Group Holdings

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 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).

Looking back five years, both Distell Group Holdings' share price and EPS declined; the latter at a rate of 26% per year. This fall in the EPS is worse than the 11% compound annual share price fall. So the market may previously have expected a drop, or else it expects the situation will improve. The high P/E ratio of 66.06 suggests that shareholders believe earnings will grow in the years ahead.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on Distell Group Holdings' earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Distell Group Holdings' 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 Distell Group Holdings' TSR, which was a 37% drop over the last 5 years, was not as bad as the share price return.

A Different Perspective

Investors in Distell Group Holdings had a tough year, with a total loss of 27%, against a market gain of about 0.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 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. For example, we've discovered 4 warning signs for Distell Group Holdings (1 is significant!) that you should be aware of before investing here.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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