Create clickbait style titles:
1. “Did Park Lawn Corporation’s Share Price Deserve To Drop 40%?”
2. “Uncovering Why Park Lawn Corporation’s Shares Have Dropped So Much”
Are You Familiar with What has Caused Park Lawn Corporation’s (TSE:PLC) Share Price to Plummet 40% in 3 Years?
Many investors define successful investing as beating the market average over the long term, only to be met with disappointment when investing in stocks that fail to meet these expectations. Park Lawn Corporation (TSE:PLC) shareholders have had an unpleasant experience as the stock price has plummeted 40% in the last three years, while the S&P 500 has gained about 29%. Similarly, the stock has declined 22% over the last year. Adding to the agony of the investors, the share price has also dropped a worrying 25% in the last 90 days.
Let’s Take a Closer Look at the Underlying Factors Contributing to the Price Decline
To quote Benjamin Graham, “In the short term, the market is a voting machine but in the long term, it is a weighing machine”. Therefore, let’s examine how the market sentiment has changed over time by looking at the interaction between the company’s share price and its reported earnings per share.
While the stock price has dropped during the past three years, surprisingly, the earnings per share reported by Park Lawn have actually improved by 33% per year. Either the company was over hyped in the past, leading to the current slump or the EPS was unable to reflect the company’s underlying performance.
We can take a look at the revenue to understand if the share price drop can be attributed to that factor. But, the news remains the same as the total revenue reported has actually increased 14% over the 3 year period.
Is There Still Hope?
The performance of Park Lawn Corporation can be best understood by taking a look at the total return to the shareholders. The total return includes factors such as discounts, spin-offs and reinvested dividends. As per the numbers, Park Lawn’s total return for the last 3 years was -37%, which was worse than the -25% reported based on the share price return alone. Dividends largely explain this divergence.
Examining the company’s revenue and earnings over the years (as seen in the chart below) reveals why this is an invaluable opportunity for investors – while the share price has declined during the past three years, the Park Lawn’s growth in earnings and revenue have been nothing but spectacular.
Investors should take some caution before investing in Park Lawn Corporation stock. There are 3 warning signs we believe you should be aware of. Additionally, if you would like to avoid any integrated risk when investing in stocks like Park Lawn Corporation, don’t forget to go through this free list of growing companies with insider buying.