Australia markets closed
  • ALL ORDS

    7,239.40
    +30.40 (+0.42%)
     
  • ASX 200

    7,014.20
    +31.50 (+0.45%)
     
  • AUD/USD

    0.7785
    +0.0055 (+0.71%)
     
  • OIL

    65.51
    +1.69 (+2.65%)
     
  • GOLD

    1,844.00
    +20.00 (+1.10%)
     
  • BTC-AUD

    62,580.92
    -1,306.33 (-2.04%)
     
  • CMC Crypto 200

    1,398.33
    +39.77 (+2.93%)
     
  • AUD/EUR

    0.6405
    +0.0011 (+0.17%)
     
  • AUD/NZD

    1.0724
    -0.0028 (-0.26%)
     
  • NZX 50

    12,367.86
    -60.26 (-0.48%)
     
  • NASDAQ

    13,393.12
    +283.97 (+2.17%)
     
  • FTSE

    7,043.61
    +80.28 (+1.15%)
     
  • Dow Jones

    34,382.13
    +360.68 (+1.06%)
     
  • DAX

    15,416.64
    +216.96 (+1.43%)
     
  • Hang Seng

    28,027.57
    +308.90 (+1.11%)
     
  • NIKKEI 225

    28,084.47
    +636.46 (+2.32%)
     

If You Had Bought Tabcorp Holdings' (ASX:TAH) Shares Three Years Ago You Would Be Down 23%

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·3-min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Tabcorp Holdings Limited (ASX:TAH) shareholders should be happy to see the share price up 21% in the last quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 23% in the last three years, significantly under-performing the market.

View our latest analysis for Tabcorp Holdings

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, Tabcorp Holdings moved from a loss to profitability. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics may better explain the share price move.

We note that, in three years, revenue has actually grown at a 30% annual rate, so that doesn't seem to be a reason to sell shares. This analysis is just perfunctory, but it might be worth researching Tabcorp Holdings more closely, as sometimes stocks fall unfairly. This could present an opportunity.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Tabcorp Holdings will earn in the future (free profit forecasts).

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Tabcorp Holdings' 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. Dividends have been really beneficial for Tabcorp Holdings shareholders, and that cash payout explains why its total shareholder loss of 13%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

Investors in Tabcorp Holdings had a tough year, with a total loss of 12%, against a market gain of about 0.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Tabcorp Holdings 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 Tabcorp Holdings (at least 1 which is significant) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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 (at) simplywallst.com.