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Park-Ohio Holdings' (NASDAQ:PKOH) Shareholders Are Down 53% On Their Shares

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Park-Ohio Holdings Corp. (NASDAQ:PKOH) shareholders will doubtless be very grateful to see the share price up 54% in the last quarter. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 53%. Some might say the recent bounce is to be expected after such a bad drop. The rise has some hopeful, but turnarounds are often precarious.

See our latest analysis for Park-Ohio 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 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, Park-Ohio Holdings' earnings per share (EPS) dropped by 49% each year. In comparison the 22% compound annual share price decline isn't as bad as the EPS drop-off. 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. With a P/E ratio of 53.43, it's fair to say the market sees a brighter future for the business.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Park-Ohio Holdings' earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We've already covered Park-Ohio Holdings' share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Park-Ohio Holdings' TSR of was a loss of 51% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Park-Ohio Holdings shareholders are down 29% for the year, but the market itself is up 20%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8.2% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Park-Ohio Holdings better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Park-Ohio Holdings you should be aware of, and 1 of them is a bit concerning.

There are plenty of other companies that have insiders buying up shares. You probably do 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.