Palfinger AG (VIE:PAL) shareholders should be happy to see the share price up 16% in the last month. But that doesn’t change the fact that the returns over the last year have been less than pleasing. After all, the share price is down 10% in the last year, significantly under-performing the market.
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 way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
Palfinger managed to increase earnings per share from a loss to a profit, over the last 12 months. When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action. But we may find different metrics more enlightening.
With a low yield of 1.8% we doubt that the dividend influences the share price much. Palfinger’s revenue is actually up 9.8% over the last year. Since we can’t easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
We know that Palfinger has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Palfinger stock, you should check out this free report showing analyst profit forecasts.
What about the Total Shareholder Return (TSR)?
We’ve already covered Palfinger’s share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Palfinger’s TSR of was a loss of 8.6% for the year. That wasn’t as bad as its share price return, because it has paid dividends.
A Different Perspective
We regret to report that Palfinger shareholders are down 8.6% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 0.9%. 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. On the bright side, long term shareholders have made money, with a gain of 3.2% per year over half a decade. 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. Before forming an opinion on Palfinger you might want to consider these 3 valuation metrics.
If you are like me, then you will not want to miss this free list of growing companies 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 AT exchanges.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.