Rapala VMC (HEL:RAP1V shareholders incur further losses as stock declines 10% this week, taking three-year losses to 68%

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Rapala VMC Corporation (HEL:RAP1V) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 69% drop in the share price over that period. And over the last year the share price fell 27%, so we doubt many shareholders are delighted.

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

View our latest analysis for Rapala VMC

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

Over the three years that the share price declined, Rapala VMC's earnings per share (EPS) dropped significantly, falling to a loss. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But it's safe to say we'd generally expect the share price to be lower as a result!

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

While the broader market lost about 8.0% in the twelve months, Rapala VMC shareholders did even worse, losing 27%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.7% 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 Rapala VMC better, we need to consider many other factors. Even so, be aware that Rapala VMC is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

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