More weakness as Norstar Holdings (TLV:NSTR) drops 12% this week, taking five-year losses to 42%

In order to justify the effort of picking individual stocks, it is worth striving to beat the returns of an index fund. But in any portfolio, results will be mixed between individual stocks. So we wouldn’t blame in the long run Norstar Holdings Inc. (TLV:NSTR) shareholders for doubting their decision to hold as the stock has fallen 50% in half a decade. Even worse, it’s down 28% in about a month, which isn’t fun at all. It is important to note that this could be a market reaction to the recently released financial results. You can view the latest figures in our corporate report.

Looking back to the past week, investor sentiment for Norstar Holdings is not positive, so let’s see if there is a mismatch between the fundamentals and the stock price.

Check out our latest analysis for Norstar Holdings

Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are dynamic systems that are too reactive and that investors are not always rational. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

In five years of share price growth, Norstar Holdings went from loss to profitability. This would generally be viewed as a positive, so we’re surprised to see the stock price down. Other metrics can better explain the stock price movement.

It could be that the 8.2% drop in revenue per year is taken as evidence that Norstar Holdings is shrinking. This probably encouraged some shareholders to sell the stock.

The graph below illustrates the evolution of income and income over time (reveal the exact values ​​by clicking on the image).

TASE: NSTR Earnings and Revenue Growth June 6, 2022

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive chart.

What about dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price performance. While the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of any capital raising or spin-offs. off updated. Arguably, TSR gives a more complete picture of the return generated by a stock. It turns out that Norstar Holdings’ TSR for the last 5 years was -42%, which exceeds the share price return mentioned earlier. The dividends paid by the company thus inflated the total return to shareholders.

A different perspective

It’s good to see that Norstar Holdings shareholders have received a total shareholder return of 37% over the past year. This includes the dividend. There is no doubt that these recent returns are much better than TSR’s loss of 7% per year over five years. This makes us a little suspicious, but the company may have changed course. It is always interesting to follow the evolution of the share price over the long term. But to better understand Norstar Holdings, we need to consider many other factors. For example, we have identified 5 warning signs for Norstar Holdings (1 is a bit worrying) that you should be aware of.

We’ll like Norstar Holdings more if we see big insider buying. In the meantime, watch this free list of growing companies with significant and recent insider buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on IL exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.