Advertisement
UK markets closed
  • NIKKEI 225

    39,154.85
    -439.54 (-1.11%)
     
  • HANG SENG

    17,311.05
    -158.31 (-0.91%)
     
  • CRUDE OIL

    77.50
    +0.54 (+0.70%)
     
  • GOLD FUTURES

    2,397.50
    -9.80 (-0.41%)
     
  • DOW

    39,853.87
    -504.22 (-1.25%)
     
  • Bitcoin GBP

    50,868.27
    -215.38 (-0.42%)
     
  • CMC Crypto 200

    1,355.00
    -10.90 (-0.80%)
     
  • NASDAQ Composite

    17,342.41
    -654.94 (-3.64%)
     
  • UK FTSE All Share

    4,468.59
    -10.90 (-0.24%)
     

Elementis (LON:ELM) shareholders have endured a 51% loss from investing in the stock five years ago

Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example, after five long years the Elementis plc (LON:ELM) share price is a whole 58% lower. That is extremely sub-optimal, to say the least. In contrast, the stock price has popped 8.9% in the last thirty days.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

Check out our latest analysis for Elementis

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

ADVERTISEMENT

Over five years Elementis' earnings per share dropped significantly, falling to a loss, with the share price also lower. The recent extraordinary items contributed to this situation. At present it's hard to make valid comparisons between EPS and the share price. However, we can say we'd expect to see a falling share price in this scenario.

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

earnings-per-share-growth
earnings-per-share-growth

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Elementis' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Elementis' total shareholder return (TSR) and its share price change, which we've covered above. 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. Elementis' TSR of was a loss of 51% 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 Elementis shareholders are down 7.5% for the year. Unfortunately, that's worse than the broader market decline of 2.8%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. However, the loss over the last year isn't as bad as the 9% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand Elementis better, we need to consider many other factors. For example, we've discovered 1 warning sign for Elementis that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here