Volatility 101: Should Microequities Asset Management Group (ASX:MAM) Shares Have Dropped 38%?

Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the Microequities Asset Management Group Limited (ASX:MAM) share price slid 38% over twelve months. That contrasts poorly with the market return of 17%. Microequities Asset Management Group may have better days ahead, of course; we’ve only looked at a one year period.

View our latest analysis for Microequities Asset Management Group

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 Microequities Asset Management Group reported an EPS drop of 51% for the last year. The share price fall of 38% isn’t as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn’t more difficult.

The company’s earnings per share (over time) are depicted in the image below.

ASX:MAM Past and Future Earnings, October 22nd 2019
ASX:MAM Past and Future Earnings, October 22nd 2019

This free interactive report on Microequities Asset Management Group’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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 Microequities Asset Management Group the TSR over the last year was -35%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Given that the market gained 17% in the last year, Microequities Asset Management Group shareholders might be miffed that they lost 35% (even including dividends) . While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it’s good to see the share price has rebounded by 9.1%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Importantly, we haven’t analysed Microequities Asset Management Group’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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 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. Thank you for reading.