ProCredit Holding KGaA (ETR:PCZ) stock falls 11% in past week as five-year earnings and shareholder returns continue downward trend

ProCredit Holding AG & Co. KGaA (ETR:PCZ) shareholders should be happy to see the share price up 18% in the last quarter. But that doesn't change the fact that the returns over the last half decade have been disappointing. In fact, the share price has declined rather badly, down some 59% in that time. Some might say the recent bounce is to be expected after such a bad drop. We'd err towards caution given the long term under-performance.

Since ProCredit Holding KGaA has shed €34m 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 ProCredit Holding KGaA

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Looking back five years, both ProCredit Holding KGaA's share price and EPS declined; the latter at a rate of 7.0% per year. This reduction in EPS is less than the 16% annual reduction in the share price. This implies that the market was previously too optimistic about the stock. The low P/E ratio of 7.85 further reflects this reticence.

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 ProCredit Holding KGaA'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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, ProCredit Holding KGaA's TSR for the last 5 years was -54%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that ProCredit Holding KGaA has rewarded shareholders with a total shareholder return of 13% in the last twelve months. That's including the dividend. That certainly beats the loss of about 9% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand ProCredit Holding KGaA better, we need to consider many other factors. For instance, we've identified 3 warning signs for ProCredit Holding KGaA that you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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