We think intelligent long term investing is the way to go. But along the way some stocks are going to perform badly. For example, after five long years the Jupiter Fund Management Plc (LON:JUP) share price is a whole 75% lower. We certainly feel for shareholders who bought near the top.
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 Jupiter Fund Management
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).
In the last half decade Jupiter Fund Management saw its share price fall as its EPS declined below zero. This was, in part, due to extraordinary items impacting earnings. Since the company has fallen to a loss making position, it’s hard to compare the change in EPS with the share price change. But we would generally expect a lower price, given the situation.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into Jupiter Fund Management’s key metrics by checking this interactive graph of Jupiter Fund Management’s earnings, revenue and cash flow.
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Jupiter Fund Management the TSR over the last 5 years was -63%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
It’s good to see that Jupiter Fund Management has rewarded shareholders with a total shareholder return of 26% in the last twelve months. And that does include the dividend. Notably the five-year annualised TSR loss of 10% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It’s always interesting to track share price performance over the longer term. But to understand Jupiter Fund Management better, we need to consider many other factors. Even so, be aware that Jupiter Fund Management is showing 1 warning sign in our investment analysis , you should know about…
