We think intelligent long term investing is the way to go. But no-one is immune from buying too high. Zooming in on an example, the GC Rieber Shipping ASA (OB:RISH) share price dropped 69% in the last half decade. That's an unpleasant experience for long term holders. The silver lining is that the stock is up 4.3% in about a week.
See our latest analysis for GC Rieber Shipping
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 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.
GC Rieber Shipping became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.
It could be that the revenue decline of 33% per year is viewed as evidence that GC Rieber Shipping is shrinking. This has probably encouraged some shareholders to sell down the stock.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What about the Total Shareholder Return (TSR)?
We've already covered GC Rieber Shipping's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that GC Rieber Shipping's TSR, which was a 64% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
We're pleased to report that GC Rieber Shipping shareholders have received a total shareholder return of 9.7% over one year. Notably the five-year annualised TSR loss of 19% 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 5 warning signs for GC Rieber Shipping (2 are potentially serious) that you should be aware of.