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If You Had Bought Steel & Tube Holdings' (NZSE:STU) Shares Five Years Ago You Would Be Down 66%

While it may not be enough for some shareholders, we think it is good to see the Steel & Tube Holdings Limited (NZSE:STU) share price up 30% in a single quarter. But that doesn't change the fact that the returns over the last half decade have been disappointing. Indeed, the share price is down 66% in the period. So we're hesitant to put much weight behind the short term increase. We'd err towards caution given the long term under-performance.

Check out our latest analysis for Steel & Tube Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Over five years Steel & Tube Holdings' earnings per share dropped significantly, falling to a loss, with the share price also lower. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But we would generally expect a lower price, given the situation.

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You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

Dive deeper into Steel & Tube Holdings' key metrics by checking this interactive graph of Steel & Tube Holdings's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Steel & Tube Holdings' total shareholder return (TSR) and its share price change, which we've covered above. 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. Dividends have been really beneficial for Steel & Tube Holdings shareholders, and that cash payout explains why its total shareholder loss of 51%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

Steel & Tube Holdings shareholders are down 9.8% for the year, but the market itself is up 11%. 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. However, the loss over the last year isn't as bad as the 9% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand Steel & Tube Holdings better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Steel & Tube Holdings .

But note: Steel & Tube Holdings 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 NZ 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.