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While not a mind-blowing move, it is good to see that the TeamTalk Limited (NZSE:TTK) share price has gained 13% in the last three months. But that doesn't change the fact that the returns over the last five years have been less than pleasing. You would have done a lot better buying an index fund, since the stock has dropped 49% in that half decade.
Check out our latest analysis for TeamTalk
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 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 TeamTalk's share price and EPS declined; the latter at a rate of 1.4% per year. This reduction in EPS is less than the 12% annual reduction in the share price. This implies that the market was previously too optimistic about the stock. The less favorable sentiment is reflected in its current P/E ratio of 6.43.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into TeamTalk's key metrics by checking this interactive graph of TeamTalk's earnings, revenue and cash flow.
A Dividend Lost
The share price return figures discussed above don't include the value of dividends paid previously, but the total shareholder return (TSR) does. By accounting for the value of dividends paid, the TSR can be seen as a more complete measure of the value a company brings to its shareholders. TeamTalk's TSR over the last 5 years is -30%; better than its share price return. Even though the company isn't paying dividends at the moment, it has done in the past.
A Different Perspective
TeamTalk shareholders gained a total return of 0.8% during the year. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 6.9% per year, over five years. So this might be a sign the business has turned its fortunes around. Before forming an opinion on TeamTalk you might want to consider these 3 valuation metrics.
We will like TeamTalk 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 NZ exchanges.
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.
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. Thank you for reading.