Those Who Purchased PPC (JSE:PPC) Shares Five Years Ago Have A 95% Loss To Show For It

March 17, 2020
  •  Updated
August 10, 2022
JSE:PPC
Source: Shutterstock

We're definitely into long term investing, but some companies are simply bad investments over any time frame. We really hate to see fellow investors lose their hard-earned money. Anyone who held PPC Ltd (JSE:PPC) for five years would be nursing their metaphorical wounds since the share price dropped 95% in that time. And some of the more recent buyers are probably worried, too, with the stock falling 79% in the last year. The falls have accelerated recently, with the share price down 64% in the last three months. Of course, this share price action may well have been influenced by the 30% decline in the broader market, throughout the period.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

See our latest analysis for PPC

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

In the last half decade PPC saw its share price fall as its EPS declined below zero. This was, in part, due to extraordinary items impacting earnings. At present it's hard to make valid comparisons between EPS and the share price. But we would generally expect a lower price, given the situation.

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

JSE:PPC Past and Future Earnings, March 18th 2020
JSE:PPC Past and Future Earnings, March 18th 2020

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 PPC's 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. PPC's TSR of was a loss of 92% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

We regret to report that PPC shareholders are down 79% for the year. Unfortunately, that's worse than the broader market decline of 24%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 40% 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. It's always interesting to track share price performance over the longer term. But to understand PPC better, we need to consider many other factors. Even so, be aware that PPC is showing 4 warning signs in our investment analysis , and 2 of those make us uncomfortable...

We will like PPC better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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