Lenzing (VIE:LNZ) Share Prices Have Dropped 26% In The Last Three Years

It is doubtless a positive to see that the Lenzing Aktiengesellschaft (VIE:LNZ) share price has gained some 72% in the last three months. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 26% in the last three years, significantly under-performing the market.

View our latest analysis for Lenzing

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

During the three years that the share price fell, Lenzing's earnings per share (EPS) dropped by 78% each year. In comparison the 10% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. With a P/E ratio of 720.95, it's fair to say the market sees a brighter future for the business.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Lenzing's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Lenzing shareholders, and that cash payout explains why its total shareholder loss of 18%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

Lenzing shareholders are down 7.5% over twelve months, which isn't far from the market return of -7.9%. Longer term investors wouldn't be so upset, since they would have made 6%, each year, over five years. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. It's always interesting to track share price performance over the longer term. But to understand Lenzing better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Lenzing (of which 2 are concerning!) you should know about.

We will like Lenzing better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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