Did Changing Sentiment Drive Elis's Share Price Down By 33%?

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Elis SA (EPA:ELIS) shareholders over the last year, as the share price declined 33%. That's disappointing when you consider the market returned 2.1%. At least the damage isn't so bad if you look at the last three years, since the stock is down 9.9% in that time. The falls have accelerated recently, with the share price down 17% in the last three months.

View our latest analysis for Elis

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 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).

Unfortunately Elis reported an EPS drop of 48% for the last year. This fall in the EPS is significantly worse than the 33% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

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

We know that Elis has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Elis's financial health with this freereport on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Elis's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) and any discounted capital raisings offered to shareholders. Elis's TSR of was a loss of 32% for the year. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Elis shareholders are down 32% for the year (even including dividends), but the broader market is up 2.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Fortunately the longer term story is brighter, with total returns averaging about 0.2% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. Before forming an opinion on Elis you might want to consider these 3 valuation metrics.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.