Statistically speaking, long-term investing is a profitable venture. But unfortunately, some companies are simply not successful. For example, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) The stock price has fallen 75% in five years. We obviously feel bad for shareholders who bought at the peak price. We also note that the stock has performed poorly over the past year, with the share price falling 51%. The declines have accelerated recently, with the share price falling 12% over the past three months.
Since shareholder returns have been declining over the long term, let’s take a look at the underlying fundamentals over this period and see if they have matched the returns.
Check out our latest analysis for Cracker Barrel Old Country Store
While the efficient markets hypothesis is still taught by some, it is well established that markets are over-reactive dynamic systems and investors do not always act rationally. An imperfect but simple way to examine how the market perception of a company has changed is to compare the change in earnings per share (EPS) with the stock price movement.
Looking back five years, both Cracker Barrel Old Country Store’s share price and earnings per share have declined, the latter by 22% per year. This change in earnings per share is fairly close to the average annual share price decline of 24%. This suggests that market participants have not changed their opinion of the company all that much. Rather, the share price has roughly followed the growth in earnings per share.
The company’s earnings per share (over time) is shown in the image below (click to see the exact numbers).
Dive deeper into Cracker Barrel Old Country Store’s key metrics by checking out this interactive graph of Cracker Barrel Old Country Store’s earnings, revenue and cash flow.
What about dividends?
In addition to measuring the share price return, investors should also consider the total shareholder return (TSR). While 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. It is fair to say that the TSR gives a more complete picture for dividend-paying stocks. We note that the TSR for Cracker Barrel Old Country Store over the last 5 years was -69%, which is better than the share price return mentioned above. Thus, the dividends paid by the company have the in total shareholder return.
A different perspective
While the broader market gained around 28% over the past year, Cracker Barrel Old Country Store shareholders lost 48% (even including dividends). However, keep in mind that even the best stocks sometimes underperform the market over a trailing twelve month period. Unfortunately, last year’s performance may indicate unresolved issues, as it was worse than the 11% annualized loss over the past half decade. We know Baron Rothschild said investors should “buy when there is blood in the streets,” but we caution that investors should first be sure they are buying a high-quality company. It is always interesting to follow share price trends over a longer period of time. But to better understand Cracker Barrel Old Country Store, we need to consider many other factors. Case in point: We found 4 warning signs for Cracker Barrel Old Country Store You should be aware.
Naturally Cracker Barrel Old Country Store may not be the best stock to buy. You may want to see this free Collection of growth stocks.
Please note that the market returns quoted in this article reflect the market weighted average returns of stocks currently trading on U.S. exchanges.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
