Statistically speaking, long term investing is a profitable endeavour. But that doesn’t mean long term investors can avoid big losses. For example, after five long years the Corus Entertainment Inc. (TSE:CJR.B) share price is a whole 76% lower. That’s not a lot of fun for true believers. And we doubt long term believers are the only worried holders, since the stock price has declined 61% over the last twelve months. The falls have accelerated recently, with the share price down 20% in the last three months.
With the stock having lost 13% in the past week, it’s worth taking a look at business performance and seeing if there’s any red flags.
View our latest analysis for Corus Entertainment
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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.
In the last half decade Corus Entertainment saw its share price fall as its EPS declined below zero. The recent extraordinary items contributed to this situation. At present it’s hard to make valid comparisons between EPS and the share price. But we would generally expect a lower price, given the situation.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Corus Entertainment’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). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Corus Entertainment’s TSR for the last 5 years was -66%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
We regret to report that Corus Entertainment shareholders are down 58% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 0.07%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. It’s always interesting to track share price performance over the longer term. But to understand Corus Entertainment better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 1 warning sign with Corus Entertainment , and understanding them should be part of your investment process.
Corus Entertainment is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.