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Investors Who Bought SpartanNash (NASDAQ:SPTN) Shares Three Years Ago Are Now Down 55%

Simply Wall St

SpartanNash Company (NASDAQ:SPTN) shareholders are doubtless heartened to see the share price bounce 44% in just one week. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 55% in the last three years, falling well short of the market return.

View our latest analysis for SpartanNash

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the three years that the share price fell, SpartanNash's earnings per share (EPS) dropped by 53% each year. This fall in the EPS is worse than the 24% compound annual share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. This positive sentiment is also reflected in the generous P/E ratio of 92.14.

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

NasdaqGS:SPTN Past and Future Earnings, March 21st 2020

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on SpartanNash'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). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, SpartanNash's TSR for the last 3 years was -49%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that SpartanNash shareholders have received a total shareholder return of 3.2% over the last year. That's including the dividend. Notably the five-year annualised TSR loss of 10.0% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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 example, we've discovered 5 warning signs for SpartanNash (1 is a bit unpleasant!) that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

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