Earnings are growing at NÜRNBERGER Beteiligungs-AG (ETR:NBG6) but shareholders still don't like its prospects

Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by NÜRNBERGER Beteiligungs-AG (ETR:NBG6) shareholders over the last year, as the share price declined 14%. That's well below the market return of 21%. At least the damage isn't so bad if you look at the last three years, since the stock is down 9.9% in that time. Furthermore, it's down 11% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 5.1% in the same period.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Check out our latest analysis for NÜRNBERGER Beteiligungs-AG

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 unfortunate twelve months during which the NÜRNBERGER Beteiligungs-AG share price fell, it actually saw its earnings per share (EPS) improve by 9.7%. It's quite possible that growth expectations may have been unreasonable in the past.

It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.

NÜRNBERGER Beteiligungs-AG's dividend seems healthy to us, so we doubt that the yield is a concern for the market. From what we can see, revenue is pretty flat, so that doesn't really explain the share price drop. Of course, it could simply be that it simply fell short of the market consensus expectations.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

This free interactive report on NÜRNBERGER Beteiligungs-AG's balance sheet strength 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 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of NÜRNBERGER Beteiligungs-AG, it has a TSR of -9.4% for the last 1 year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

NÜRNBERGER Beteiligungs-AG shareholders are down 9.4% for the year (even including dividends), but the market itself is up 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand NÜRNBERGER Beteiligungs-AG better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with NÜRNBERGER Beteiligungs-AG (including 1 which is a bit concerning) .

But note: NÜRNBERGER Beteiligungs-AG 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.