Liontrust Asset Management (LON:LIO) investors are sitting on a loss of 65% if they invested three years ago

Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Liontrust Asset Management PLC (LON:LIO) shareholders. Unfortunately, they have held through a 74% decline in the share price in that time. And over the last year the share price fell 51%, so we doubt many shareholders are delighted. Furthermore, it’s down 21% in about a quarter. That’s not much fun for holders.

Now let’s have a look at the company’s fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 three years that the share price fell, Liontrust Asset Management’s earnings per share (EPS) dropped by 34% each year. This fall in EPS isn’t far from the rate of share price decline, which was 37% per year. So it seems like sentiment towards the stock hasn’t changed all that much over time. It seems like the share price is reflecting the declining earnings per share.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It’s good to see that there was some significant insider buying in the last three months. That’s a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Dive deeper into the earnings by checking this interactive graph of Liontrust Asset Management’s earnings, revenue and cash flow.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 Liontrust Asset Management the TSR over the last 3 years was -65%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.