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The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in TUI AG (ETR:TUI1), since the last five years saw the share price fall 79%. Furthermore, it's down 15% in about a quarter. That's not much fun for holders.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
See our latest analysis for TUI
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).
TUI became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.
In contrast to the share price, revenue has actually increased by 21% a year in the five year period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
TUI is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling TUI stock, you should check out this free report showing analyst consensus estimates for future profits.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between TUI's total shareholder return (TSR) and its share price return. 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. Its history of dividend payouts mean that TUI's TSR, which was a 22% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
TUI shareholders are up 7.4% for the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 4% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand TUI better, we need to consider many other factors. For example, we've discovered 1 warning sign for TUI that you should be aware of before investing here.