Stock Analysis

Shareholders 45% loss in TI Fluid Systems (LON:TIFS) partly attributable to the company's decline in earnings over past year

This week we saw the TI Fluid Systems plc (LON:TIFS) share price climb by 11%. But that doesn't change the reality of under-performance over the last twelve months. In fact, the price has declined 46% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added €75m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

However if you'd rather see where the opportunities and risks are within TIFS' industry, you can check out our analysis on the GB Auto Components industry.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

Unfortunately TI Fluid Systems reported an EPS drop of 94% for the last year. The share price fall of 46% isn't as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared. With a P/E ratio of 195.48, it's fair to say the market sees an EPS rebound on the cards.

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

earnings-per-share-growth
LSE:TIFS Earnings Per Share Growth September 13th 2022

Dive deeper into TI Fluid Systems' key metrics by checking this interactive graph of TI Fluid Systems's earnings, revenue and cash flow.

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A Different Perspective

The last twelve months weren't great for TI Fluid Systems shares, which performed worse than the market, costing holders 45%, including dividends. The market shed around 5.4%, no doubt weighing on the stock price. Shareholders have lost 6% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. For example, we've discovered 2 warning signs for TI Fluid Systems (1 is a bit concerning!) that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

Valuation is complex, but we're here to simplify it.

Discover if TI Fluid Systems might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.