Ideally, your overall portfolio should beat the market average. But even the best stock picker will only win with some selections. At this point, some shareholders may be questioning their investment in Jupiter Fund Management Plc (LON:JUP), since the last five years have seen the stock price drop by 49%. Moreover, it fell by 14% in about a quarter. It’s not much fun for the holders.
With the stock down 3.3% last week, it’s worth taking a look at the trade performance and seeing if there are any red flags.
Check out our latest analysis for Jupiter Fund Management
While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
Looking back five years, Jupiter Fund Management‘s share price and EPS have both declined; the latter at a rate of 5.2% per annum. Readers should note that the stock price fell faster than EPS, at a rate of 12% per year, over the period. This implies that the market is more cautious about the company these days. The less favorable sentiment is reflected in its current P/E ratio of 9.75.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
We appreciate that insiders have been buying stocks over the past twelve months. Even so, future earnings will be far more important to whether current shareholders are making money. Before buying or selling a stock, we always recommend careful consideration of historical growth trends, available here.
What about dividends?
In addition to measuring share price performance, investors should also consider total shareholder return (TSR). While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. It turns out that Jupiter Fund Management’s TSR for the last 5 years was -26%, which exceeds the stock price return mentioned earlier. And there’s no price guessing that dividend payouts largely explain the divergence!
A different perspective
Investors at Jupiter Fund Management had a difficult year, with a total loss of 19% (including dividends), against a market gain of around 11%. Even good stock prices sometimes drop, but we want to see improvements in a company’s fundamentals before we get too interested. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the 5% annualized loss over the past half-decade. Generally speaking, long-term stock price weakness can be a bad sign, though contrarian investors might want to hunt for the stock in hopes of a turnaround. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 3 warning signs with Jupiter Fund Management (at least 1 that should not be ignored), and understanding them should be part of your investment process.
Jupiter Fund Management isn’t the only stock insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.
Please note that the market returns quoted in this article reflect the market-weighted average returns of the shares currently trading on UK stock exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.