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Such Is Life: How PZ Cussons (LON:PZC) Shareholders Saw Their Shares Drop 51%

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Simply Wall St
·3 min read
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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term PZ Cussons Plc (LON:PZC) shareholders for doubting their decision to hold, with the stock down 51% over a half decade. Shareholders have had an even rougher run lately, with the share price down 12% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 25% in the same timeframe.

View our latest analysis for PZ Cussons

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

Looking back five years, both PZ Cussons's share price and EPS declined; the latter at a rate of 16% per year. Notably, the share price has fallen at 13% per year, fairly close to the change in the EPS. This suggests that market participants have not changed their view of the company all that much. Rather, the share price change has reflected changes in earnings per share.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

LSE:PZC Past and Future Earnings April 20th 2020
LSE:PZC Past and Future Earnings April 20th 2020

Dive deeper into PZ Cussons's key metrics by checking this interactive graph of PZ Cussons'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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for PZ Cussons the TSR over the last 5 years was -43%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Although it hurts that PZ Cussons returned a loss of 7.4% in the last twelve months, the broader market was actually worse, returning a loss of 17%. What is more upsetting is the 11% per annum loss investors have suffered over the last half decade. While the losses are slowing we doubt many shareholders are happy with the stock. It's always interesting to track share price performance over the longer term. But to understand PZ Cussons better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for PZ Cussons you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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. Thank you for reading.