Even after rising 56% this past week, Ark Restaurants (NASDAQ:ARKR) shareholders are still down 17% over the past five years #UKFinance

Ark Restaurants Corp. (NASDAQ:ARKR) has rebounded strongly over the last week, with the share price soaring 56%. But that doesn’t change the fact that the returns over the last five years have been less than pleasing. After all, the share price is down 25% in that time, significantly under-performing the market.

Although the past week has been more reassuring for shareholders, they’re still in the red over the last five years, so let’s see if the underlying business has been responsible for the decline.

See our latest analysis for Ark Restaurants

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Over five years Ark Restaurants’ earnings per share dropped significantly, falling to a loss, with the share price also lower. The recent extraordinary items contributed to this situation. Since the company has fallen to a loss making position, it’s hard to compare the change in EPS with the share price change. But we would generally expect a lower price, given the situation.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Ark Restaurants’ earnings, revenue and cash flow.

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Ark Restaurants the TSR over the last 5 years was -17%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!

Ark Restaurants shareholders gained a total return of 1.7% during the year. But that return falls short of the market. But at least that’s still a gain! Over five years the TSR has been a reduction of 3% per year, over five years. It could well be that the business is stabilizing. It’s always interesting to track share price performance over the longer term. But to understand Ark Restaurants better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we’ve spotted with Ark Restaurants (including 1 which makes us a bit uncomfortable) .

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