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The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Parkland Corporation (TSE:PKI) have tasted that bitter downside in the last year, as the share price dropped 24%. That falls noticeably short of the market return of around 5.9%. However, the longer term returns haven't been so bad, with the stock down 13% in the last three years. Unfortunately the share price momentum is still quite negative, with prices down 12% in thirty days. We do note, however, that the broader market is down 5.6% in that period, and this may have weighed on the share price.
With the stock having lost 12% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).
Unhappily, Parkland had to report a 73% decline in EPS over the last year. The share price fall of 24% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Dive deeper into the earnings by checking this interactive graph of Parkland's earnings, revenue and cash flow .
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 is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Parkland's TSR for the last 1 year was -21%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!