What Type Of Returns Would Northern Technologies International's(NASDAQ:NTIC) Shareholders Have Earned If They Purchased Their SharesYear Ago?
Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Northern Technologies International Corporation (NASDAQ:NTIC) have tasted that bitter downside in the last year, as the share price dropped 37%. That contrasts poorly with the market return of 8.2%. However, the longer term returns haven't been so bad, with the stock down 9.8% in the last three years. Unfortunately the share price momentum is still quite negative, with prices down 12% in thirty days.
See our latest analysis for Northern Technologies International
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 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.
Unfortunately Northern Technologies International reported an EPS drop of 48% for the last year. The share price fall of 37% isn't as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how Northern Technologies International has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Northern Technologies International's financial health with this free report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Northern Technologies International's total shareholder return (TSR) and its share price return. 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. Northern Technologies International's TSR of was a loss of 36% for the year. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
While the broader market gained around 8.2% in the last year, Northern Technologies International shareholders lost 36%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3.3% per year over five years. 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 Northern Technologies International better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Northern Technologies International , and understanding them should be part of your investment process.
But note: Northern Technologies International may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
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