Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Motor Oil (Hellas) Corinth Refineries S.A. (ATH:MOH) have tasted that bitter downside in the last year, as the share price dropped 47%. That’s disappointing when you consider the market declined 19%. Notably, shareholders had a tough run over the longer term, too, with a drop of 41% in the last three years.
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unfortunately Motor Oil (Hellas) Corinth Refineries reported an EPS drop of 92% for the last year. The share price fall of 47% isn’t as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment — or it may have expected earnings to drop faster. Indeed, with a P/E ratio of 50.02 there is obviously some real optimism that earnings will bounce back.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Motor Oil (Hellas) Corinth Refineries’ earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Motor Oil (Hellas) Corinth Refineries’ TSR for the last year was -43%, which exceeds the share price return mentioned earlier. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We regret to report that Motor Oil (Hellas) Corinth Refineries shareholders are down 43% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 19%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn’t be so upset, since they would have made 12%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we’ve identified 4 warning signs for Motor Oil (Hellas) Corinth Refineries (1 is significant) that you should be aware of.
Of course Motor Oil (Hellas) Corinth Refineries may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GR exchanges.
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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. 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.
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