In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund.  But in any portfolio, there will be mixed results between individual stocks.  So we wouldn't blame long term National Research Corporation (NASDAQ:NRC) shareholders for doubting their decision to hold, with the stock down 46% over a half decade.    And some of the more recent buyers are probably worried, too, with the stock falling 38% in the last year.     Shareholders have had an even rougher run lately, with the share price down 30% in the last 90 days.    This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

With the stock having lost 8.1% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.  

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).

While the share price declined over five years, National Research actually managed to increase EPS by an average of 2.3% per year.  So it doesn't seem like EPS is a great guide to understanding how the market is valuing the stock.  Or possibly, the market was previously very optimistic, so the stock has disappointed, despite improving EPS.

By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, five years ago.  Having said that, we might get a better idea of what's going on with the stock by looking at other metrics.

We don't think that the 1.7% is big factor in the share price, since it's quite small, as dividends go.    In contrast to the share price, revenue has actually increased by 4.5% a year in the five year period.  So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.    

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NasdaqGS:NRC Earnings and Revenue Growth June 4th 2024

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies.  It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years.   It might be well worthwhile taking a look at our free report on National Research's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR).  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.  It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend.  In the case of National Research, it has a TSR of -41% for the last 5 years. That exceeds its share price return that we previously mentioned.  The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

National Research shareholders are down 35% for the year (even including dividends), but the market itself is up 24%.  However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period.     Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years.  Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround.        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.   Case in point: We've spotted   3 warning signs for National Research  you should be aware of, and 1 of them makes us a bit uncomfortable.    

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.