Introducing Nordea Bank Abp (STO:NDA SE), The Stock That Dropped 25% In The Last Five Years

While it may not be enough for some shareholders, we think it is good to see the Nordea Bank Abp (STO:NDA SE) share price up 22% in a single quarter. But over the last half decade, the stock has not performed well. In fact, the share price is down 25%, which falls well short of the return you could get by buying an index fund.

Check out our latest analysis for Nordea Bank Abp

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the five years over which the share price declined, Nordea Bank Abp's earnings per share (EPS) dropped by 15% each year. The share price decline of 5.6% per year isn't as bad as the EPS decline. The relatively muted share price reaction might be because the market expects the business to turn around.

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

Dive deeper into Nordea Bank Abp's key metrics by checking this interactive graph of Nordea Bank Abp'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). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Nordea Bank Abp the TSR over the last 5 years was 6.3%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Nordea Bank Abp provided a TSR of 8.1% over the last twelve months. But that was short of the market average. The silver lining is that the gain was actually better than the average annual return of 1.2% per year over five year. It is possible that returns will improve along with the business fundamentals. 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. For example, we've discovered 3 warning signs for Nordea Bank Abp that you should be aware of before investing here.

But note: Nordea Bank Abp may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.