Stock Analysis

John Menzies (LON:MNZS) Share Prices Have Dropped 76% In The Last Three Years

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LSE:MNZS
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It is a pleasure to report that the John Menzies plc (LON:MNZS) is up 40% in the last quarter. But the last three years have seen a terrible decline. Indeed, the share price is down a whopping 76% in the last three years. So it's about time shareholders saw some gains. Of course the real question is whether the business can sustain a turnaround.

Check out our latest analysis for John Menzies

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

John Menzies saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
LSE:MNZS Earnings Per Share Growth November 23rd 2020

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of John Menzies' earnings, revenue and cash flow.

A Different Perspective

While the broader market lost about 6.1% in the twelve months, John Menzies shareholders did even worse, losing 60%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. 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. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for John Menzies you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

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