Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. Investors in Landis+Gyr Group AG (VTX:LAND) have tasted that bitter downside in the last year, as the share price dropped 45%. That's disappointing when you consider the market declined 0.5%. However, the longer term returns haven't been so bad, with the stock down 24% in the last three years. The falls have accelerated recently, with the share price down 12% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Unhappily, Landis+Gyr Group had to report a 70% decline in EPS over the last year. The share price fall of 45% isn't as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Landis+Gyr Group has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Landis+Gyr Group's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Landis+Gyr Group shareholders are down 45% for the year, but the broader market is up 0.5%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 6% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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 2 warning signs for Landis+Gyr Group that you should be aware of.
But note: Landis+Gyr Group 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 CH exchanges.
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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. 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.
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