X-FAB Silicon Foundries' (EPA:XFAB) earnings have declined over three years, contributing to shareholders 24% loss

As an investor its worth striving to ensure your overall portfolio beats the market average. But if you try your hand at stock picking, you risk returning less than the market. We regret to report that long term X-FAB Silicon Foundries SE (EPA:XFAB) shareholders have had that experience, with the share price dropping 24% in three years, versus a market return of about 21%. It's down 29% in about a quarter.

While the stock has risen 9.1% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

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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 three years that the share price fell, X-FAB Silicon Foundries' earnings per share (EPS) dropped by 14% each year. In comparison the 9% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on X-FAB Silicon Foundries' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

X-FAB Silicon Foundries shareholders gained a total return of 9.2% during the year. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 0.7% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for X-FAB Silicon Foundries you should be aware of.

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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 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.