Even though Daldrup & Söhne (ETR:4DS) has lost €10m market cap in last 7 days, shareholders are still up 504% over 5 years

It's been a soft week for Daldrup & Söhne Aktiengesellschaft (ETR:4DS) shares, which are down 12%. But that does not change the realty that the stock's performance has been terrific, over five years. In fact, during that period, the share price climbed 504%. Impressive! So it might be that some shareholders are taking profits after good performance. Only time will tell if there is still too much optimism currently reflected in the share price. We love happy stories like this one. The company should be really proud of that performance!

In light of the stock dropping 12% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

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In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During the five years of share price growth, Daldrup & Söhne moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. Indeed, the Daldrup & Söhne share price has gained 64% in three years. During the same period, EPS grew by 47% each year. This EPS growth is higher than the 18% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

It is of course excellent to see how Daldrup & Söhne has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Daldrup & Söhne's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Daldrup & Söhne shareholders have received a total shareholder return of 75% over the last year. That's better than the annualised return of 43% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Daldrup & Söhne better, we need to consider many other factors. Take risks, for example - Daldrup & Söhne has 3 warning signs we think you should be aware of.

But note: Daldrup & Söhne 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 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.