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It might be of some concern to shareholders to see the Propel Funeral Partners Limited (ASX:PFP) share price down 13% in the last month. But the silver lining is the stock is up over five years. However we are not very impressed because the share price is only up 84%, less than the market return of 104%.
So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.
Check out our latest analysis for Propel Funeral Partners
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the five years of share price growth, Propel Funeral Partners moved from a loss to profitability. That would generally be considered a positive, so we'd hope to see the share price to rise.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Propel Funeral Partners has grown profits over the years, but the future is more important for shareholders. This free interactive report on Propel Funeral Partners' balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Propel Funeral Partners, it has a TSR of 114% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Investors in Propel Funeral Partners had a tough year, with a total loss of 4.9% (including dividends), against a market gain of about 4.0%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 16% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Propel Funeral Partners , and understanding them should be part of your investment process.