Northam Platinum Holdings (JSE: NPH) shareholders might be feeling the pinch from the recent 16% share price drop in the last month, and 35% drop over the past twelve months. But before hitting the panic button, it may be worth to zoom out and consider the bigger picture.
Over the past five years, NPH has delivered an impressive 112% return. Yes, the last month has been rough, but it’s important not to lose sight of long-term growth. However, for those who bought in the last year and are facing a 35% decline, we understand the sting.
Now, diving deeper, did the recent share price movement reflect NPH’s actual business performance?
One way to analyze this is by comparing the change in earnings per share (EPS) with the share price movement. In the past five years, NPH transitioned from being unprofitable to profitable, often justifying a significant share price increase.
However, this transition happened five years ago. Looking at the last three years, a different picture emerges. The share price is down 49%, while EPS has actually grown by 1.8% per year. This mismatch suggests the market might be overly pessimistic about NPH’s future, despite positive EPS growth.
What does this mean for investors?
It’s a complex call. The short-term drop is concerning, but the long-term track record and positive EPS growth offer hope. Ultimately, the decision depends on your individual investment goals and risk tolerance.
Here are some key takeaways:
- Don’t get hung up on short-term fluctuations. Long-term trends matter more.
- Look beyond the share price and analyze underlying business performance.
- Understand your own risk tolerance before making investment decisions.
Remember, this is just a snapshot. Do your own research and consider consulting with a financial advisor before making any investment decisions.
Read the full anaysis by Simply Wall Street.