Did Changing Sentiment Drive StarHub's (SGX:CC3) Share Price Down A Worrying 68%?
Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example the StarHub Ltd (SGX:CC3) share price dropped 68% over five years. That is extremely sub-optimal, to say the least. The good news is that the stock is up 4.4% in the last week.
View our latest analysis for StarHub
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the five years over which the share price declined, StarHub's earnings per share (EPS) dropped by 14% each year. Readers should note that the share price has fallen faster than the EPS, at a rate of 20% per year, over the period. So it seems the market was too confident about the business, in the past.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into StarHub's key metrics by checking this interactive graph of StarHub's earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of StarHub, it has a TSR of -56% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
It's good to see that StarHub has rewarded shareholders with a total shareholder return of 1.7% in the last twelve months. And that does include the dividend. There's no doubt those recent returns are much better than the TSR loss of 15% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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 StarHub (1 can't be ignored) that you should be aware of.
We will like StarHub better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SG exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
