The Dignity (LON:DTY) Share Price Is Down 77% So Some Shareholders Are Rather Upset
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
As every investor would know, not every swing hits the sweet spot. But you have a problem if you face massive losses more than once in a while. So take a moment to sympathize with the long term shareholders of Dignity plc (LON:DTY), who have seen the share price tank a massive 77% over a three year period. That'd be enough to cause even the strongest minds some disquiet. And more recent buyers are having a tough time too, with a drop of 36% in the last year. Furthermore, it's down 12% in about a quarter. That's not much fun for holders.
View our latest analysis for Dignity
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Dignity saw its EPS decline at a compound rate of 18% per year, over the last three years. The share price decline of 38% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 10.13.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into Dignity's key metrics by checking this interactive graph of Dignity's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Dignity's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Dignity shareholders, and that cash payout explains why its total shareholder loss of 75%, over the last 3 years, isn't as bad as the share price return.
A Different Perspective
Dignity shareholders are down 34% for the year (even including dividends), but the market itself is up 2.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 13% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Importantly, we haven't analysed Dignity's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
We will like Dignity 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 GB exchanges.
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.
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. Thank you for reading.
