The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Metall Zug AG (VTX:METN) shareholders over the last year, as the share price declined 32%. That contrasts poorly with the market return of 8.6%. Looking at the longer term, the stock is down 28% over three years. Furthermore, it’s down 12% in about a quarter. That’s not much fun for holders.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. 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).
Unhappily, Metall Zug had to report a 6.1% decline in EPS over the last year. This reduction in EPS is not as bad as the 32% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.
This free interactive report on Metall Zug’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
Investors should note that there’s a difference between Metall Zug’s total shareholder return (TSR) and its share price change, which we’ve covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Metall Zug’s TSR of was a loss of 30% for the year. That wasn’t as bad as its share price return, because it has paid dividends.
A Different Perspective
Investors in Metall Zug had a tough year, with a total loss of 30% (including dividends), against a market gain of about 8.6%. 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 1.6% 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. Keeping this in mind, a solid next step might be to take a look at Metall Zug’s dividend track record. This free interactive graph is a great place to start.
Of course Metall Zug may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CH 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 firstname.lastname@example.org. 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.