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Some Iluka Resources (ASX:ILU) Shareholders Are Down 12%

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Iluka Resources Limited (ASX:ILU) shareholders should be happy to see the share price up 12% in the last month. It's not great that the stock is down over the last year. But it did better than its market, which fell 11%.

View our latest analysis for Iluka Resources

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Iluka Resources fell to a loss making position during the year. Some investors no doubt dumped the stock as a result. Of course, if the company can turn the situation around, investors will likely profit.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

ASX:ILU Past and Future Earnings May 20th 2020
ASX:ILU Past and Future Earnings May 20th 2020

It is of course excellent to see how Iluka Resources has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Iluka Resources's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Iluka Resources's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Iluka Resources shareholders, and that cash payout explains why its total shareholder loss of 10%, over the last year, isn't as bad as the share price return.

A Different Perspective

Iluka Resources shareholders are down 10% over twelve months (even including dividends) , which isn't far from the market return of -11%. Longer term investors wouldn't be so upset, since they would have made 0.9%, each year, over five years. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. If you would like to research Iluka Resources in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email 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. 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. Thank you for reading.