Investors in RCI Hospitality Holdings (NASDAQ:RICK) have seen massive returns of 573% over the past three years
RCI Hospitality Holdings, Inc. (NASDAQ:RICK) shareholders might be concerned after seeing the share price drop 18% in the last quarter. But that doesn't displace its brilliant performance over three years. The longer term view reveals that the share price is up 565% in that period. So the recent fall doesn't do much to dampen our respect for the business. The only way to form a view of whether the current price is justified is to consider the merits of the business itself. We love happy stories like this one. The company should be really proud of that performance!
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
View our latest analysis for RCI Hospitality Holdings
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During three years of share price growth, RCI Hospitality Holdings achieved compound earnings per share growth of 34% per year. In comparison, the 88% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. That's not necessarily surprising considering the three-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that RCI Hospitality Holdings has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling RCI Hospitality Holdings stock, you should check out this FREE detailed report on its balance sheet.
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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for RCI Hospitality Holdings the TSR over the last 3 years was 573%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's good to see that RCI Hospitality Holdings has rewarded shareholders with a total shareholder return of 16% in the last twelve months. Of course, that includes the dividend. Having said that, the five-year TSR of 22% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand RCI Hospitality Holdings better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for RCI Hospitality Holdings you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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