If you love investing in stocks you're bound to buy some losers. But the last three years have been particularly tough on longer term Equitrans Midstream Corporation (NYSE:ETRN) shareholders. Unfortunately, they have held through a 66% decline in the share price in that time. And more recent buyers are having a tough time too, with a drop of 27% in the last year. The falls have accelerated recently, with the share price down 23% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 17% in the same timeframe.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Equitrans Midstream
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.
Equitrans Midstream saw its share price decline over the three years in which its EPS also dropped, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Equitrans Midstream the TSR over the last 3 years was -55%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Equitrans Midstream shareholders are down 21% over twelve months (even including dividends), which isn't far from the market return of -20%. The loss of 16% per year, over the last three years, is nothing to boast about. That's not really very heartening, although at least the decline has slowed more recently. It's always interesting to track share price performance over the longer term. But to understand Equitrans Midstream better, we need to consider many other factors. For example, we've discovered 2 warning signs for Equitrans Midstream that you should be aware of before investing here.