Next Fifteen Communications Group plc (LON:NFC) shareholders might be concerned after seeing the share price drop 13% in the last quarter. But over five years returns have been remarkably great. In fact, during that period, the share price climbed 349%. Impressive! So it might be that some shareholders are taking profits after good performance. But the real question is whether the business fundamentals can improve over the long term.
Check out our latest analysis for Next Fifteen Communications Group
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Over half a decade, Next Fifteen Communications Group managed to grow its earnings per share at 59% a year. The EPS growth is more impressive than the yearly share price gain of 35% over the same period. So one could conclude that the broader market has become more cautious towards the stock.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Next Fifteen Communications Group has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
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, Next Fifteen Communications Group's TSR for the last 5 years was 390%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Next Fifteen Communications Group shareholders are down 1.8% for the year (even including dividends) , but the market itself is up 1.9%. 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. Longer term investors wouldn't be so upset, since they would have made 37%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before forming an opinion on Next Fifteen Communications Group you might want to consider these 3 valuation metrics.