U.S. Markets closed
  • S&P Futures

    3,437.75
    -14.00 (-0.41%)
     
  • Dow Futures

    28,079.00
    -110.00 (-0.39%)
     
  • Nasdaq Futures

    11,621.00
    -42.50 (-0.36%)
     
  • Russell 2000 Futures

    1,625.30
    -10.30 (-0.63%)
     
  • Crude Oil

    39.15
    -0.70 (-1.76%)
     
  • Gold

    1,898.50
    -6.70 (-0.35%)
     
  • Silver

    24.45
    -0.22 (-0.89%)
     
  • EUR/USD

    1.1844
    +0.0018 (+0.1540%)
     
  • 10-Yr Bond

    0.8410
    -0.0070 (-0.83%)
     
  • Vix

    27.55
    -0.56 (-1.99%)
     
  • GBP/USD

    1.3045
    -0.0035 (-0.2648%)
     
  • USD/JPY

    104.7230
    -0.1170 (-0.1116%)
     
  • BTC-USD

    13,034.28
    +16.75 (+0.13%)
     
  • CMC Crypto 200

    260.05
    -1.40 (-0.54%)
     
  • FTSE 100

    5,860.28
    +74.63 (+1.29%)
     
  • Nikkei 225

    23,516.59
    +42.29 (+0.18%)
     

Reflecting on GAMCO Investors' (NYSE:GBL) Share Price Returns Over The Last Five Years

Simply Wall St
·3 mins read

We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. Zooming in on an example, the GAMCO Investors, Inc. (NYSE:GBL) share price dropped 77% in the last half decade. We certainly feel for shareholders who bought near the top. And some of the more recent buyers are probably worried, too, with the stock falling 29% in the last year.

Check out our latest analysis for GAMCO Investors

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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 GAMCO Investors' share price and EPS declined; the latter at a rate of 10.0% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 26% per year, over the period. This implies that the market is more cautious about the business these days. The low P/E ratio of 5.58 further reflects this reticence.

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

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

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on GAMCO Investors' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 GAMCO Investors the TSR over the last 5 years was -58%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While the broader market gained around 25% in the last year, GAMCO Investors shareholders lost 29% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9.5% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand GAMCO Investors better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for GAMCO Investors you should be aware of, and 1 of them shouldn't be ignored.

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.