It can certainly be frustrating when a stock doesn’t perform as hoped. But it’s hard to avoid some disappointing investments when the overall market is in decline. Phoenix New Media Limited (NYSE: FENG) is down 68% over three years, but the total return for shareholders is 109% when you factor in the dividend. That’s better than the market, which has returned 64% over the past three years. The downturns have accelerated recently, with the stock price falling 18% over the past three months. Check out our latest analysis for Phoenix New Media There’s no denying that markets are sometimes efficient, but prices don’t always reflect underlying business performance. A flawed but reasonable way to gauge how sentiment has changed in a company is to compare earnings per share (EPS) to the share price. During the unfortunate three years of its share price decline, Phoenix New Media was able to improve its earnings per share (EPS) by as much as 227% per year. Given the share price reaction, one might guess that earnings per share is not a good guide to business performance over the period (perhaps due to a one-time loss or gain). Alternatively, growth expectations may have been unreasonable in the past. It’s worth looking at other metrics because EPS growth doesn’t seem to match the falling stock price. We note that the dividend looks healthy enough that that probably doesn’t explain the price decline. On the flip side, the uninspired 5.9% per year drop in sales can cause shareholders to drop the stock. This could worry some investors about (or lack of) the longer-term growth potential. The picture below shows how revenue and earnings have evolved over time (you can see more details by clicking on the picture). NYSE: FENG Earnings and Revenue Growth Jul 29, 2021 See how its balance sheet has strengthened (or weakened) over time with this free interactive graph. What about dividends? In addition to measuring stock price return, investors should also consider total shareholder return (TSR). While the stock price return only reflects the change in the stock price, the TSR includes the value of dividends (assuming they have been reinvested) and the benefit of discounted capital raising or spin-off. So, for companies that pay a generous dividend, the TSR is often much higher than the stock price return. In fact, Phoenix New Media’s TSR has been 109% over the past 3 years, which beats the previously mentioned share price return. And there’s no price to be had for guessing that the dividend payments largely explain the divergence! Another perspective It’s good to see that Phoenix New Media has rewarded shareholders with a total shareholder return of 108% over the past twelve months. And that includes the dividend. That’s better than the 18% annualized return over half a decade, which suggests the company has been doing better lately. Given the continued strong momentum in its stock price, it may be worth taking a closer look at the stock so you don’t miss an opportunity. It is always interesting to follow the development of the share price over the longer term. But to better understand Phoenix New Media we need to consider many other factors. Keep in mind, however, that Phoenix New Media has 4 red flags in our investment analysis that you should know … Obviously, Phoenix New Media may not be the best stock to buy. You might want to see this free collection of growth stocks. Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently trading on U.S. exchanges. If you choose to trade with Phoenix New Media, you are using the lowest cost * platform available from Barron’s overall is classified as No. 1. Interactive brokers. Trade stocks, options, futures, forex, bonds and funds in 135 markets, all from a single integrated account. This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned. * Interactive Brokers Rated as Lowest Cost Broker by StockBrokers.com Annual Online Review 2020 Do you have any feedback on this article? Concerned about the content? Contact us directly. Alternatively, send an email to the editorial team (at) simplywallst.com.
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