Mayr-Melnhof Karton (VIE:MMK) sheds €82m, company earnings and investor returns have been trending downwards for past three years

If you love investing in stocks you're bound to buy some losers. Long term Mayr-Melnhof Karton AG (VIE:MMK) shareholders know that all too well, since the share price is down considerably over three years. Unfortunately, they have held through a 54% decline in the share price in that time. And more recent buyers are having a tough time too, with a drop of 25% in the last year. The falls have accelerated recently, with the share price down 23% in the last three months.

With the stock having lost 4.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Mayr-Melnhof Karton

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 three years that the share price fell, Mayr-Melnhof Karton's earnings per share (EPS) dropped by 24% each year. 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. That suggests that the market sentiment around the company hasn't changed much over that time, despite the disappointment. Rather, the share price has approximately tracked EPS growth.

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

This free interactive report on Mayr-Melnhof Karton's 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. We note that for Mayr-Melnhof Karton the TSR over the last 3 years was -51%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Investors in Mayr-Melnhof Karton had a tough year, with a total loss of 24% (including dividends), against a market gain of about 13%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 3 warning signs for Mayr-Melnhof Karton that you should be aware of.

But note: Mayr-Melnhof Karton 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 Austrian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.