While it may not be enough for some shareholders, we think it is good to see the Air Partner plc (LON:AIR) share price up 20% in a single quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 36% in the last three years, falling well short of the market return.
View our latest analysis for Air Partner
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.
Air Partner saw its EPS decline at a compound rate of 51% per year, over the last three years. The recent extraordinary items made their mark on profits. This fall in the EPS is worse than the 14% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. This positive sentiment is also reflected in the generous P/E ratio of 147.60.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free interactive report on Air Partner's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We've already covered Air Partner's share price action, but we should also mention its total shareholder return (TSR). 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. Air Partner's TSR of was a loss of 27% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
It's nice to see that Air Partner shareholders have received a total shareholder return of 18% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 5.1% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 7 warning signs for Air Partner (1 is significant) that you should be aware of.