Gestamp Automoción (BME:GEST investor three-year losses grow to 38% as the stock sheds €120m this past week

As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Gestamp Automoción, S.A. (BME:GEST) shareholders, since the share price is down 43% in the last three years, falling well short of the market return of around 48%. And more recent buyers are having a tough time too, with a drop of 31% in the last year. Even worse, it's down 11% in about a month, which isn't fun at all.

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

See our latest analysis for Gestamp Automoción

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).

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. We note that for Gestamp Automoción the TSR over the last 3 years was -38%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

While the broader market gained around 19% in the last year, Gestamp Automoción shareholders lost 28% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. 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 Gestamp Automoción better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Gestamp Automoción you should be aware of, and 1 of them shouldn't be ignored.

We will like Gestamp Automoción better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Spanish 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.