Lifestyle Communities (ASX:LIC)’s profits have fallen over three years, with 60% of shareholders in a loss.

It’s good to see the Lifestyle Communities Limited (ASX:LIC) share price up 11% over the week. Meanwhile, stock prices have fallen significantly over the past three years. During that time, the stock price fell 62%. So it’s good to see it going up again. There is hope in this rise, but the turnaround is often unstable.

More encouragingly, the company has increased its market capitalization by AU$101m in the last 7 days. Let’s see if we can identify the source of three years of losses for shareholders.

Check out our latest analysis for Lifestyle Community.

To paraphrase Benjamin Graham, in the short term the market is a voting machine, but in the long term it is a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can learn how investor attitudes to a company have changed over time.

Over the three years the share price was down, Lifestyle Communities’s earnings per share (EPS) fell 22% each year. This change in EPS is quite close to the average annual decline in share prices of 27%. This suggests that despite the disappointment, market sentiment around the company hasn’t changed much since then. The decline in earnings per share appears to be reflected in the stock price.

The image below shows how EPS has changed over time (unveil the exact values ​​by clicking on the image).

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

different perspective

Lifestyle Communities shareholders are down 46% for the year (even including dividends), while the market itself is up 21%. Even blue-chip stocks can see their share prices drop from time to time, and we like to see improvement in a company’s fundamental metrics before we get too interested. Long-term investors won’t be too upset, as they will earn 3% annually over five years. If fundamental data continues to point to long-term sustainable growth, the current selloff could be an opportunity worth considering. I think it’s very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. Still, be aware that Lifestyle Community is showing 3 warning signs in our investment analysis. Here’s what you need to know:

There are plenty of other companies where insiders are buying up shares. Perhaps you don’t want to miss this free list of undervalued small-cap stocks that insiders are buying.

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

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