The three-year underlying earnings growth at Rémy Cointreau (EPA:RCO) is promising, but the shareholders are still in the red over that time

Investing in stocks inevitably means buying into some companies that perform poorly. Long term Rémy Cointreau SA (EPA:RCO) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 68% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 50% lower in that time. The falls have accelerated recently, with the share price down 20% in the last three months.

After losing 4.1% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Rémy Cointreau

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

During the unfortunate three years of share price decline, Rémy Cointreau actually saw its earnings per share (EPS) improve by 7.3% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

We note that, in three years, revenue has actually grown at a 5.4% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating Rémy Cointreau further; while we may be missing something on this analysis, there might also be an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Rémy Cointreau is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Rémy Cointreau, it has a TSR of -65% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Investors in Rémy Cointreau had a tough year, with a total loss of 49% (including dividends), against a market gain of about 4.6%. 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 8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Rémy Cointreau better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Rémy Cointreau you should be aware of.

But note: Rémy Cointreau may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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