In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Balwin Properties Limited (JSE:BWN) shareholders, since the share price is down 47% in the last three years, falling well short of the market return of around 37%. And the ride hasn't got any smoother in recent times over the last year, with the price 27% lower in that time.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
View our latest analysis for Balwin Properties
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.
Although the share price is down over three years, Balwin Properties actually managed to grow EPS by 13% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.
Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
Revenue is actually up 7.7% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Balwin Properties further; while we may be missing something on this analysis, there might also be 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).
This free interactive report on Balwin Properties' balance sheet strength is a great place to start, if you want to investigate the stock further.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Balwin Properties' total shareholder return (TSR) and its share price return. 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. Balwin Properties' TSR of was a loss of 36% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.