NACCO Industries (NYSE: NC) Shareholders’ Five-Year Loss Likely Due to Declining Profits
NACCO Industries, Inc. (NYSE: NC) Shareholders should be happy to see the stock price rise 16% last month. But over the past five years, the title has not performed well. You would have done a lot better buying an index fund, since the stock has fallen 57% in that half-decade.
The recent 14% rise could be a positive sign of things to come, so let’s take a hard look at historical fundamentals.
Check out our latest review for NACCO Industries
To paraphrase Benjamin Graham: In the short term the market is a voting machine, but in the long term it is a weighing machine. An imperfect but simple way to examine how a company’s market perception has changed is to compare the evolution of earnings per share (EPS) with the movement of the share price.
Looking back five years, NACCO Industries’ share price and EPS both declined; the latter at the rate of 11% per year. Note that the share price fell faster than EPS, at a rate of 16% per year, over the period. So it seems that the market was overconfident in the company in the past. The less favorable sentiment is reflected in its current P / E ratio of 11.75.
You can see below how the EPS has evolved over time (find out the exact values by clicking on the image).
Dive deeper into key NACCO Industries metrics by viewing this interactive graph of NACCO Industries earnings, revenue and cash flow.
What about dividends?
When considering investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any discounted demerger or capital increase, as well as any dividend, based on the assumption that dividends are reinvested. It’s fair to say that the TSR gives a more complete picture of dividend paying stocks. In the case of NACCO Industries, it has a TSR of -23% for the last 5 years. This exceeds the return on its share price that we mentioned earlier. This is largely the result of his dividend payments!
A different perspective
We are pleased to report that the shareholders of NACCO Industries received a total shareholder return of 62% over one year. This includes the dividend. There is no doubt that these recent returns are much better than the TSR’s loss of 4% per annum over five years. It makes us a little suspicious, but the company may have changed course. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we have identified 3 warning signs for NACCO Industries that you need to be aware of.
But beware : NACCO Industries may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the US stock exchanges.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St does not have any position in the mentioned stocks.
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