The five-year decline in earnings might be taking its toll on Quantum Foods Holdings (JSE:QFH) shareholders as stock falls 18% over the past week

Quantum Foods Holdings Ltd (JSE:QFH) shareholders might understandably be very concerned that the share price has dropped 34% in the last quarter. While that's not great, the returns over five years have been decent. It's good to see the share price is up 66% in that time, better than its market return of 60%.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

See our latest analysis for Quantum Foods Holdings

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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 five years of share price growth, Quantum Foods Holdings moved from a loss to profitability. That's generally thought to be a genuine positive, so investors may expect to see an increasing share price.

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

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Quantum Foods Holdings' earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We've already covered Quantum Foods 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 Quantum Foods Holdings' TSR of 75% over the last 5 years is better than the share price return.

A Different Perspective

It's nice to see that Quantum Foods Holdings shareholders have received a total shareholder return of 28% over the last year. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Case in point: We've spotted 3 warning signs for Quantum Foods Holdings you should be aware of, and 2 of them are a bit unpleasant.

Quantum Foods Holdings is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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