Ceconomy's (ETR:CEC) earnings trajectory could turn positive as the stock rallies 4.3% this past week

While it may not be enough for some shareholders, we think it is good to see the Ceconomy AG (ETR:CEC) share price up 25% in a single quarter. But over the last half decade, the stock has not performed well. In fact, the share price is down 38%, which falls well short of the return you could get by buying an index fund.

The recent uptick of 4.3% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Ceconomy

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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Looking back five years, both Ceconomy's share price and EPS declined; the latter at a rate of 6.5% per year. This reduction in EPS is less than the 9% annual reduction in the share price. This implies that the market is more cautious about the business these days.

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

It might be well worthwhile taking a look at our free report on Ceconomy's earnings, revenue and cash flow.

A Dividend Lost

It's important to keep in mind that we've been talking about the share price returns, which don't include dividends, while the total shareholder return does. By accounting for the value of dividends paid, the TSR can be seen as a more complete measure of the value a company brings to its shareholders. Over the last 5 years, Ceconomy generated a TSR of -35%, which is, of course, better than the share price return. Even though the company isn't paying dividends at the moment, it has done in the past.

A Different Perspective

It's nice to see that Ceconomy shareholders have received a total shareholder return of 4.2% over the last year. That certainly beats the loss of about 6% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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 example, we've discovered 1 warning sign for Ceconomy that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.