In This Article:
Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example the Shine Justice Ltd (ASX:SHJ) share price dropped 73% over five years. We certainly feel for shareholders who bought near the top. The falls have accelerated recently, with the share price down 21% in the last three months.
Check out our latest analysis for Shine Justice
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).
Looking back five years, both Shine Justice's share price and EPS declined; the latter at a rate of 4.4% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 23% per year, over the period. So it seems the market was too confident about the business, in the past. The low P/E ratio of 5.32 further reflects this reticence.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Shine Justice has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Shine Justice will grow revenue in the future.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Shine Justice's TSR for the last 5 years was -68%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
While the broader market lost about 7.2% in the twelve months, Shine Justice shareholders did even worse, losing 11% (even including dividends) . 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. Unfortunately, longer term shareholders are suffering worse, given the loss of 11% doled out over the last five years. 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 Shine Justice better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Shine Justice you should be aware of.