Stock Analysis

The one-year underlying earnings growth at Alantra Partners (BME:ALNT) is promising, but the shareholders are still in the red over that time

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BME:ALNT
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The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Alantra Partners, S.A. (BME:ALNT) share price slid 31% over twelve months. That falls noticeably short of the market decline of around 12%. At least the damage isn't so bad if you look at the last three years, since the stock is down 25% in that time. The falls have accelerated recently, with the share price down 19% in the last three months. Of course, this share price action may well have been influenced by the 8.7% decline in the broader market, throughout the period.

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

However if you'd rather see where the opportunities and risks are within ALNT's industry, you can check out our analysis on the ES Capital Markets industry.

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 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.

Even though the Alantra Partners share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

It's fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.

Alantra Partners' dividend seems healthy to us, so we doubt that the yield is a concern for the market. The revenue trend doesn't seem to explain why the share price is down. Unless, of course, the market was expecting a revenue uptick.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
BME:ALNT Earnings and Revenue Growth September 28th 2022

This free interactive report on Alantra Partners' balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. We note that for Alantra Partners the TSR over the last 1 year was -28%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While the broader market lost about 12% in the twelve months, Alantra Partners shareholders did even worse, losing 28% (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. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Even so, be aware that Alantra Partners is showing 1 warning sign in our investment analysis , you should know about...

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 ES exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Alantra Partners is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About BME:ALNT

Alantra Partners

Alantra Partners, S.A. provides investment banking and asset management services in Spain and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth0
Past Performance4
Financial Health4
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Established dividend payer and good value.