Lechwerke (FRA:LEC shareholders incur further losses as stock declines 4.0% this week, taking three-year losses to 51%

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term Lechwerke AG (FRA:LEC) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 55% decline in the share price in that time.

Since Lechwerke has shed €106m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Lechwerke

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.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Lechwerke's TSR for the last 3 years was -51%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Lechwerke shareholders gained a total return of 6.5% during the year. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 4% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Lechwerke better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Lechwerke .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.