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If You Had Bought DiamondRock Hospitality's (NYSE:DRH) Shares Three Years Ago You Would Be Down 21%

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It is a pleasure to report that the DiamondRock Hospitality Company (NYSE:DRH) is up 81% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 21% in the last three years, significantly under-performing the market.

View our latest analysis for DiamondRock Hospitality

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the three years that the share price declined, DiamondRock Hospitality's earnings per share (EPS) dropped significantly, falling to a loss. 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 it's safe to say we'd generally expect the share price to be lower as a result!

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

Dive deeper into DiamondRock Hospitality's key metrics by checking this interactive graph of DiamondRock Hospitality's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered DiamondRock Hospitality's share price action, but we should also mention its total shareholder return (TSR). 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 DiamondRock Hospitality shareholders, and that cash payout explains why its total shareholder loss of 13%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

While the broader market gained around 27% in the last year, DiamondRock Hospitality shareholders lost 13%. 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. Longer term investors wouldn't be so upset, since they would have made 6%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand DiamondRock Hospitality better, we need to consider many other factors. Even so, be aware that DiamondRock Hospitality is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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