TXT e-solutions' (BIT:TXT) Shareholders Are Down 24% On Their Shares

As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term TXT e-solutions S.p.A. (BIT:TXT) shareholders, since the share price is down 24% in the last three years, falling well short of the market decline of around 2.7%. The more recent news is of little comfort, with the share price down 21% in a year. Even worse, it's down 9.6% in about a month, which isn't fun at all.

Check out our latest analysis for TXT e-solutions

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.

TXT e-solutions saw its EPS decline at a compound rate of 28% per year, over the last three years. This was, in part, due to extraordinary items impacting earnings. In comparison the 9% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. This positive sentiment is also reflected in the generous P/E ratio of 112.01.

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

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between TXT e-solutions' total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that TXT e-solutions' TSR, which was a 14% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

We regret to report that TXT e-solutions shareholders are down 21% for the year. Unfortunately, that's worse than the broader market decline of 8.1%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand TXT e-solutions better, we need to consider many other factors. Take risks, for example - TXT e-solutions has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.

We will like TXT e-solutions better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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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. 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.
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