In general, long-term investments are preferable. But, unfortunately, some companies simply do not succeed. for example, Jupiter Fund Management Plc (LON:JUP)'s share price has fallen 77% in five years. I certainly feel sorry for shareholders who bought near the peak. And long-term holders aren't the only ones hurting, as the stock is down 34% in the last year.
With that in mind, it's worth checking whether a company's underlying fundamentals are driving its long-term performance, or if there are any discrepancies.
Check out our latest analysis for Jupiter Fund Management.
To paraphrase Benjamin Graham, in the short term the market is a voting machine, but in the long term it is a weighing machine. 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.
Over the past five years, Jupiter Fund Management's share price has fallen as its EPS has fallen below zero. Recent unusual circumstances have contributed to this situation. At this point, it's difficult to meaningfully compare EPS and stock prices. However, we can say that we would expect the stock price to fall in this scenario.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It might be well worth taking a look at ours free Report on Jupiter Fund Management's earnings, revenue and cash flow.
What will happen to the dividend?
As well as measuring share price return, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, 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. Coincidentally, Jupiter Fund Management's TSR over the past five years was -68%, which is higher than the share price return mentioned above. And there's no kudos to speculating that dividend payments are the main explanation for the divergence.
different perspective
Investors in Jupiter Fund Management have had a tough year, losing a total of 30% (including dividends) against a market gain of around 7.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance ended on a down note, with shareholders facing a total annual loss of 11% over five years. I know Baron Rothschild said investors should “buy when there's blood on the streets,” but investors should first make sure they're buying a quality business. Warns you that you need to confirm. It's always interesting to track stock performance over the long term. However, to understand Jupiter Fund Management better, you need to consider many other factors. Still, note that Jupiter Fund Management indicates that: 2 warning signs in investment analysis you should know…
If you want to check out another company with potentially better financials, don't miss this free A list of companies that have proven they can grow revenue.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on UK 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.
