Maiden Holdings (NASDAQ:MHLD) rallies 14% this week, taking five-year gains to 112%
Maiden Holdings, Ltd. (NASDAQ:MHLD) shareholders might understandably be very concerned that the share price has dropped 38% in the last quarter. But that scarcely detracts from the really solid long term returns generated by the company over five years. Indeed, the share price is up an impressive 112% in that time. We think it's more important to dwell on the long term returns than the short term returns. Only time will tell if there is still too much optimism currently reflected in the share price. While the returns over the last 5 years have been good, we do feel sorry for those shareholders who haven't held shares that long, because the share price is down 53% in the last three years.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
See our latest analysis for Maiden Holdings
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 the five years of share price growth, Maiden Holdings moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. We can see that the Maiden Holdings share price is down 53% in the last three years. Meanwhile, EPS is up 13% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -22% per year.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into Maiden Holdings' key metrics by checking this interactive graph of Maiden Holdings's earnings, revenue and cash flow.
A Different Perspective
While the broader market gained around 34% in the last year, Maiden Holdings shareholders lost 45%. 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. On the bright side, long term shareholders have made money, with a gain of 16% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Maiden Holdings better, we need to consider many other factors. Take risks, for example - Maiden Holdings has 5 warning signs (and 2 which make us uncomfortable) we think you should know about.
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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 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.
