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One of the frustrations of investing is when a stock goes down. But when the market is down, you're bound to have some losers. While the First Ship Lease Trust (SGX:D8DU) share price is down 39% in the last three years, the total return to shareholders (which includes dividends) was 19%. And that total return actually beats the market decline of 15%. Contrary to the longer term story, the last month has been good for stockholders, with a share price gain of 10.0%.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for First Ship Lease Trust
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, First Ship Lease Trust moved from a loss to profitability. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.
It's quite likely that the declining dividend has caused some investors to sell their shares, pushing the price lower in the process. The revenue decline, at an annual rate of 40% over three years, might be considered salt in the wound.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on First Ship Lease Trust's balance sheet strength is a great place to start, if you want to investigate the stock further.
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. We note that for First Ship Lease Trust the TSR over the last 3 years was 19%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that First Ship Lease Trust has rewarded shareholders with a total shareholder return of 41% in the last twelve months. Of course, that includes the dividend. That's better than the annualised return of 37% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. For instance, we've identified 3 warning signs for First Ship Lease Trust (1 is a bit unpleasant) that you should be aware of.