Those Who Purchased Corporate Travel Management (ASX:CTD) Shares A Year Ago Have A 64% Loss To Show For It
Investing in stocks comes with the risk that the share price will fall. Anyone who held Corporate Travel Management Limited (ASX:CTD) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 64%. Notably, shareholders had a tough run over the longer term, too, with a drop of 55% in the last three years. The falls have accelerated recently, with the share price down 58% in the last three months. Of course, this share price action may well have been influenced by the 23% decline in the broader market, throughout the period.
See our latest analysis for Corporate Travel Management
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately Corporate Travel Management reported an EPS drop of 6.9% for the last year. This reduction in EPS is not as bad as the 64% share price fall. So it seems the market was too confident about the business, a year ago.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Corporate Travel Management's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We've already covered Corporate Travel Management's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Corporate Travel Management's TSR, which was a 63% drop over the last year, was not as bad as the share price return.
A Different Perspective
While the broader market lost about 13% in the twelve months, Corporate Travel Management shareholders did even worse, losing 63% (even including dividends) . Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2.0% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Corporate Travel Management that you should be aware of before investing here.
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 AU 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.
