Spark New Zealand (NZSE:SPK) earnings and shareholder returns have been trending downwards for the last three years, but the stock climbs 3.4% this past week
For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Spark New Zealand Limited (NZSE:SPK) shareholders, since the share price is down 55% in the last three years, falling well short of the market decline of around 9.4%. The more recent news is of little comfort, with the share price down 50% in a year. Furthermore, it's down 26% in about a quarter. That's not much fun for holders.
The recent uptick of 3.4% could be a positive sign of things to come, so let's take a look at historical fundamentals.
Our free stock report includes 4 warning signs investors should be aware of before investing in Spark New Zealand. Read for free now.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Spark New Zealand saw its EPS decline at a compound rate of 23% per year, over the last three years. So do you think it's a coincidence that the share price has dropped 23% per year, a very similar rate to the EPS? We don't. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. It seems like the share price is reflecting the declining earnings per share.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
NZSE:SPK Earnings Per Share Growth May 8th 2025
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Spark New Zealand's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 Spark New Zealand, it has a TSR of -43% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
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