Stock Analysis

The three-year shareholder returns and company earnings persist lower as Komax Holding (VTX:KOMN) stock falls a further 8.5% in past week

SWX:KOMN
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The truth is that if you invest for long enough, you're going to end up with some losing stocks. Long term Komax Holding AG (VTX:KOMN) shareholders know that all too well, since the share price is down considerably over three years. Regrettably, they have had to cope with a 58% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 39% in the last year. On top of that, the share price is down 8.5% in the last week.

Since Komax Holding has shed CHF50m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Komax Holding

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

Komax Holding saw its EPS decline at a compound rate of 39% per year, over the last three years. This fall in the EPS is worse than the 25% compound annual share price fall. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. With a P/E ratio of 95.25, it's fair to say the market sees a brighter future for the business.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
SWX:KOMN Earnings Per Share Growth January 14th 2025

This free interactive report on Komax Holding's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Komax Holding the TSR over the last 3 years was -56%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Komax Holding shareholders are down 38% for the year (even including dividends), but the market itself is up 6.6%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand Komax Holding better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Komax Holding you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

Valuation is complex, but we're here to simplify it.

Discover if Komax Holding might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.