Rand Merchant Investment Holdings'(JSE:RMI) Share Price Is Down 29% Over The Past Three Years.

While not a mind-blowing move, it is good to see that the Rand Merchant Investment Holdings Limited (JSE:RMI) share price has gained 12% in the last three months. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 29% in the last three years, significantly under-performing the market.

Check out our latest analysis for Rand Merchant Investment 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 three years that the share price fell, Rand Merchant Investment Holdings' earnings per share (EPS) dropped by 25% each year. This fall in the EPS is worse than the 11% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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 Rand Merchant Investment Holdings' share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Rand Merchant Investment Holdings' TSR of was a loss of 23% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

It's good to see that Rand Merchant Investment Holdings has rewarded shareholders with a total shareholder return of 7.5% in the last twelve months. Notably the five-year annualised TSR loss of 0.1% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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 instance, we've identified 2 warning signs for Rand Merchant Investment Holdings that you should be aware of.

Of course Rand Merchant Investment Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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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. 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.
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