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Sep 20

Reflecting on Heartland Group Holdings (NZSE:HGH) Share Price Returns Over The Last Three Years – Simply Wall St

Its nice to see the Heartland Group Holdings Limited (NZSE:HGH) share price up 10% in a week. But that doesnt help the fact that the three year return is less impressive. After all, the share price is down 29% in the last three years, significantly under-performing the market.

See our latest analysis for Heartland Group Holdings

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Although the share price is down over three years, Heartland Group Holdings actually managed to grow EPS by 5.4% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesnt seem to correlate with the change in share price, its worth taking a look at other metrics.

Given the healthiness of the dividend payments, we doubt that theyve concerned the market. Its good to see that Heartland Group Holdings has increased its revenue over the last three years. But its not clear to us why the share price is down. It might be worth diving deeper into the fundamentals, lest an opportunity goes begging.

The companys revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Heartland Group Holdings will earn in the future (free profit forecasts).

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. In the case of Heartland Group Holdings, it has a TSR of -16% for the last 3 years. That exceeds its share price return that we previously mentioned. And theres no prize for guessing that the dividend payments largely explain the divergence!

While the broader market gained around 7.6% in the last year, Heartland Group Holdings shareholders lost 19% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 8.8% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Its always interesting to track share price performance over the longer term. But to understand Heartland Group Holdings better, we need to consider many other factors. To that end, you should learn about the 2 warning signs weve spotted with Heartland Group Holdings (including 1 which is doesnt sit too well with us) .

Heartland Group Holdings 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 NZ exchanges.

PromotedWhen trading Heartland Group Holdings or any other investment, use the platform considered by many to be the Professionals Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.

This article by Simply Wall St is general in nature. 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. *Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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Reflecting on Heartland Group Holdings (NZSE:HGH) Share Price Returns Over The Last Three Years - Simply Wall St

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