Did You Manage To Avoid K+S's (FRA:SDF) 35% Share Price Drop?

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the K+S Aktiengesellschaft (FRA:SDF) share price is down 35% in the last year. That falls noticeably short of the market return of around -8.1%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 24% in three years. And the share price decline continued over the last week, dropping some 8.4%.

View our latest analysis for K+S

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 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, K+S had to report a 92% decline in EPS over the last year. This fall in the EPS is significantly worse than the 35% the share price fall. It may have been that the weak EPS was not as bad as some had feared. Indeed, with a P/E ratio of 228.64 there is obviously some real optimism that earnings will bounce back.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What about the Total Shareholder Return (TSR)?

We've already covered K+S's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) and any discounted capital raisings offered to shareholders. Dividends have been really beneficial for K+S shareholders, and that cash payout explains why its total shareholder loss of 34%, over the last year, isn't as bad as the share price return.

A Different Perspective

While the broader market lost about 8.1% in the twelve months, K+S shareholders did even worse, losing 34% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4.5% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: insiders have been buying them).

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 editorial-team@simplywallst.com. 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.