The one-year loss for M. Dias Branco Indústria e Comércio de Alimentos (BVMF:MDIA3) shareholders likely driven by its shrinking earnings

M. Dias Branco S.A. Indústria e Comércio de Alimentos (BVMF:MDIA3) shareholders should be happy to see the share price up 17% in the last quarter. But in truth the last year hasn't been good for the share price. In fact the stock is down 35% in the last year, well below the market return.

The recent uptick of 4.7% could be a positive sign of things to come, so let's take a look at historical fundamentals.

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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 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 M. Dias Branco Indústria e Comércio de Alimentos reported an EPS drop of 27% for the last year. The share price decline of 35% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

This free interactive report on M. Dias Branco Indústria e Comércio de Alimentos' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 1.1% in the last year, M. Dias Branco Indústria e Comércio de Alimentos shareholders lost 33% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before forming an opinion on M. Dias Branco Indústria e Comércio de Alimentos you might want to consider these 3 valuation metrics.

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