Passive investing in index funds is a good way to ensure that your returns closely match the overall market. While individual stocks can be big winners, there are many stocks that fail to generate satisfactory returns. unfortunately, IPH Limited (ASX:IPH) share price is down 16% over 12 months. This is well below the market return of 15%. Long-term shareholders haven't been hit too hard, as the share price has fallen a relatively painless 5.1% over three years. To make matters worse, it's down 12% in about a month, which isn't fun at all. This may be related to recent financial results. You can see the latest data by reading our report.
So let's take a look at whether the company's long-term performance is in line with the progress of its underlying business.
Check out our latest analysis for IPH.
in his essay Graham & Doddsville SuperInvestors Warren Buffett has said that stock prices do not always rationally reflect the value of a company. By comparing earnings per share (EPS) and share price changes over time, we can learn how investor attitudes to a company have changed over time.
Unfortunately, IPH reported a 4.8% decline in EPS over the last year. The 16% share price decline actually outweighs the EPS decline. So a year ago, the market seemed to have too much confidence in this business.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's good to see that there has been some significant insider buying in the last three months. That's a positive thing. On the other hand, we think revenue and profit trends are more important metrics for the business.this free This interactive report on IPH's earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.
What will happen to the dividend?
It's important to consider not only the share price return, but also the total shareholder return for a particular 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 increases and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. For IPH, the TSR for the past year was -12%. This exceeds the stock return mentioned earlier. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
While the broader market is up about 15% in the last year, IPH shareholders are down 12% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Long-term investors probably won't be too upset, since they would have returned 1.7% annually over five years. If fundamental data continues to point to long-term sustainable growth, the current selloff could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important.For example, taking risks – IPH is 4 warning signs I think you should know.
There are plenty of other companies where insiders are buying up shares.I think that's probably the case. do not have I want to miss this free A list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
