November 5, 2024
Investors in Genco Shipping & Trading (NYSE:GNK) have seen impressive returns of 116% over the past five years #UKFinance

Investors in Genco Shipping & Trading (NYSE:GNK) have seen impressive returns of 116% over the past five years #UKFinance

CashNews.co

While Genco Shipping & Trading Limited (NYSE:GNK) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 17% in the last quarter. But at least the stock is up over the last five years. In that time, it is up 49%, which isn’t bad, but is below the market return of 103%.

So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.

See our latest analysis for Genco Shipping & Trading

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years of share price growth, Genco Shipping & Trading moved from a loss to profitability. That would generally be considered a positive, so we’d hope to see the share price to rise.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth
earnings-per-share-growth

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Genco Shipping & Trading’s earnings, revenue and cash flow.

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. We note that for Genco Shipping & Trading the TSR over the last 5 years was 116%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

Genco Shipping & Trading provided a TSR of 29% over the last twelve months. But that return falls short of the market. On the bright side, that’s still a gain, and it’s actually better than the average return of 17% over half a decade It is possible that returns will improve along with the business fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example – Genco Shipping & Trading has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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