The three-year shareholder returns and company earnings persist lower as 7C Solarparken (ETR:HRPK) stock falls a further 10% in past week

Investing in stocks inevitably means buying into some companies that perform poorly. Long term 7C Solarparken AG (ETR:HRPK) shareholders know that all too well, since the share price is down considerably over three years. Unfortunately, they have held through a 54% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 40% lower in that time. Shareholders have had an even rougher run lately, with the share price down 17% in the last 90 days.

If the past week is anything to go by, investor sentiment for 7C Solarparken isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for 7C Solarparken

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

7C Solarparken saw its EPS decline at a compound rate of 25% per year, over the last three years. This fall in EPS isn't far from the rate of share price decline, which was 23% per year. That suggests that the market sentiment around the company hasn't changed much over that time, despite the disappointment. It seems like the share price is reflecting the declining earnings per share.

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

Dive deeper into 7C Solarparken's key metrics by checking this interactive graph of 7C Solarparken's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of 7C Solarparken, it has a TSR of -50% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Investors in 7C Solarparken had a tough year, with a total loss of 38% (including dividends), against a market gain of about 20%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. We realise that Baron Rothschild 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 business. It's always interesting to track share price performance over the longer term. But to understand 7C Solarparken better, we need to consider many other factors. For example, we've discovered 4 warning signs for 7C Solarparken (1 shouldn't be ignored!) that you should be aware of before investing here.

Of course 7C Solarparken may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.