For many, the main point of investing is to generate higher returns than the overall market. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in Balwin Properties Limited (JSE:BWN), since the last five years saw the share price fall 45%. Shareholders have had an even rougher run lately, with the share price down 14% in the last 90 days.
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.
View our latest analysis for Balwin Properties
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).
Looking back five years, both Balwin Properties' share price and EPS declined; the latter at a rate of 2.2% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 11% per year, over the period. So it seems the market was too confident about the business, in the past. The low P/E ratio of 2.76 further reflects this reticence.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into Balwin Properties' key metrics by checking this interactive graph of Balwin Properties's earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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, Balwin Properties' TSR for the last 5 years was -23%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Balwin Properties' TSR for the year was broadly in line with the market average, at 13%. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 4% over the last five years. While 'turnarounds seldom turn' there are green shoots for Balwin Properties. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Balwin Properties (of which 2 can't be ignored!) you should know about.