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It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So take a moment to sympathize with the long term shareholders of Strix Group Plc (LON:KETL), who have seen the share price tank a massive 78% over a three year period. That'd be enough to cause even the strongest minds some disquiet. And the ride hasn't got any smoother in recent times over the last year, with the price 27% lower in that time.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
View our latest analysis for Strix Group
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.
Strix Group saw its EPS decline at a compound rate of 36% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 40% per year. That suggests that the market sentiment around the company hasn't changed much over that time, despite the disappointment. Rather, the share price has approximately tracked EPS growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Strix Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Strix Group's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Strix Group shareholders, and that cash payout explains why its total shareholder loss of 76%, over the last 3 years, isn't as bad as the share price return.
A Different Perspective
Strix Group shareholders are down 27% for the year, but the market itself is up 17%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Strix Group better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Strix Group you should be aware of.