Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term PCCW Limited (HKG:8) shareholders, since the share price is down 16% in the last three years, falling well short of the market return of around 13%. Unhappily, the share price slid 4.3% in the last week.
See our latest analysis for PCCW
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 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.
PCCW saw its EPS decline at a compound rate of 26% per year, over the last three years. This fall in the EPS is worse than the 5.5% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into PCCW's key metrics by checking this interactive graph of PCCW's earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for PCCW the TSR over the last 3 years was 2.8%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's nice to see that PCCW shareholders have received a total shareholder return of 9.2% over the last year. And that does include the dividend. That's better than the annualised return of 2.6% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. If you would like to research PCCW in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.