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Volatility 101: Should Jardine Cycle Carriage (SGX:C07) Shares Have Dropped 28%?

Simply Wall St

For many, the main point of investing is to generate higher returns than the overall market. But even the best stock picker will only win with some selections. At this point some shareholders may be questioning their investment in Jardine Cycle & Carriage Limited (SGX:C07), since the last five years saw the share price fall 28%. Furthermore, it's down 12% in about a quarter. That's not much fun for holders.

View our latest analysis for Jardine Cycle & Carriage

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 five years over which the share price declined, Jardine Cycle & Carriage's earnings per share (EPS) dropped by 7.2% each year. Notably, the share price has fallen at 6.3% per year, fairly close to the change in the EPS. This implies that the market has had a fairly steady view of the stock. So it's fair to say the share price has been responding to changes in EPS.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

SGX:C07 Past and Future Earnings, September 17th 2019

It might be well worthwhile taking a look at our free report on Jardine Cycle & Carriage's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Jardine Cycle & Carriage the TSR over the last 5 years was -14%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's good to see that Jardine Cycle & Carriage has rewarded shareholders with a total shareholder return of 6.2% in the last twelve months. Of course, that includes the dividend. Notably the five-year annualised TSR loss of 2.9% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. Before forming an opinion on Jardine Cycle & Carriage you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

Of course Jardine Cycle & Carriage may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SG exchanges.

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.

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. Thank you for reading.