The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Nucleus Financial Group Plc (LON:NUC) share price is down 11% in the last year. That contrasts poorly with the market return of 4.7%. We wouldn't rush to judgement on Nucleus Financial Group because we don't have a long term history to look at. In the last ninety days we've seen the share price slide 21%.
Check out our latest analysis for Nucleus Financial Group
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.
During the unfortunate twelve months during which the Nucleus Financial Group share price fell, it actually saw its earnings per share (EPS) improve by 15%. Of course, the situation might betray previous over-optimism about growth.
The divergence between the EPS and the share price is quite notable, during the year. But we might find some different metrics explain the share price movements better.
Revenue was fairly steady year on year, which isn't usually such a bad thing. But the share price might be lower because the market expected a meaningful improvement, and got none.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that Nucleus Financial Group has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Nucleus Financial Group in this interactive graph of future profit estimates.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Nucleus Financial Group's TSR for the last year was -8.6%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
While Nucleus Financial Group shareholders are down 8.6% for the year (even including dividends) , the market itself is up 4.7%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's worth noting that the last three months did the real damage, with a 21% decline. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. Before forming an opinion on Nucleus Financial Group you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.
We will like Nucleus Financial Group better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.