Even if this is not enough for some shareholders, we believe it is good Ithaca Energy plc (LON:ITH) The share price rose 11% in a single quarter. But in truth, the last year has not been kind to the share price. In fact, the stock has fallen 17% in the last year, well below the market return.

The recent 5.9% increase could be a positive sign for the future, so let’s take a look at the historical fundamentals.

Check out our latest analysis for Ithaca Energy

In his essay The super investors of Graham and Doddsville Warren Buffett described how stock prices do not always rationally reflect the value of a company. An imperfect but simple way to examine the changing market perception of a company is to compare the change in earnings per share (EPS) to the stock price movement.

Ithaca Energy was able to increase earnings per share from a loss to a profit over the last 12 months.

The result seems like a significant improvement to us, so we’re surprised the market sold off the shares. If improved profitability is a sign of things to come, then now could be the perfect time to add this stock to your watchlist.

The company’s earnings per share (over time) is shown in the image below (click to see the exact numbers).

It’s probably worth noting that the CEO earns less than the average at similarly sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow its earnings over the years. Before buying or selling a stock, we always recommend a close examination of historical growth trends, available here.

What about dividends?

It’s important to consider the total shareholder return, as well as the share price return for each stock. The TSR includes the value of any spin-offs or discounted capital raisings, as well as any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Ithaca Energy, the TSR for the last year is -4.1%. That exceeds the share price return we mentioned earlier. And there’s no prize for guessing that the dividend payments largely explain the divergence!

A different perspective

Given that the market has grown by 18% over the last year, Ithaca Energy shareholders might be upset that they lost 4.1% (even when including dividends). While the goal is to do better, it’s important to remember that even great long-term investments sometimes underperform for a year or more. It’s great to see a nice little 11% rebound over the last three months. Let’s just hope this isn’t the widely feared ‘dead cat bounce’ (which would suggest further declines to come). It’s always interesting to follow share price trends over time. But to better understand Ithaca Energy, we need to consider many other factors. For example, consider risks. Every company has them, and we’ve found 3 warning signs for Ithaca Energy You should know about this.

The story continues

Naturally, If you look elsewhere, you may find a fantastic investment. So take a look at the free List of companies we expect to grow their earnings.

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

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.