Heartland Group Holdings Limited (NZSE:HGH) shareholders should be happy that the share price rose 13% in the last quarter, but that doesn't outweigh the less than impressive returns over the past three years. In fact, the share price is down 45% in three years, and that return, dear reader, is nowhere near what you'd get from passive investing in an index fund.
In more positive news, the company has increased its market capitalization by NZ$84m in the last seven days, so let's see if we can find out what caused the three-year loss for shareholders.
Check out our latest analysis for Heartland Group Holdings
There's no denying that markets are efficient sometimes, but prices do not necessarily 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 three years that the share price was declining, Heartland Group Holdings' earnings per share (EPS) fell by 11% each year. This EPS decline was slower than the 18% annual decline in the share price. As such, the decline in EPS may have disappointed the market and caused investors to hesitate to buy.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
NZSE:HGH Earnings Per Share Growth 19 August 2024
Although we think it's positive to see significant insider buying in the past year, future earnings will be much more important to whether current shareholders make money, so it might be well worth taking a look at our free report on Heartland Group Holdings' 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. In the case of Heartland Group Holdings, the TSR for the last 3 years was -29%, which is better than the share price return shown above. Therefore, the dividends paid by the company have boosted its total shareholder return.
A different perspective
While the broader market gained about 8.8% last year, Heartland Group Holdings shareholders lost 24% (even including dividends). Even the share prices of blue chip stocks fall from time to time, but we like to see improving fundamental metrics for a company before getting too interested. Longer term investors won't be too spooked, with a gain of 0.4% per year over five years. If the fundamental data continues to point to sustainable growth over the long term, the current sell-off could be an opportunity worth considering. While it's well worth considering the different ways market conditions can affect share prices, there are other factors that are even more important. Consider risks, for example. Every company has risks, and Heartland Group Holdings has 2 warning signs you should know about.
There are plenty of other companies where insiders have been buying up shares, so you probably don't want to miss this free list of undervalued small 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 New Zealand exchanges.
Valuation is complicated, but we're here to simplify it.
Through a detailed analysis including fair value estimates, potential risks, dividends, insider trading, financial condition, and more, we determine whether Heartland Group Holdings is undervalued or overvalued.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
