Would Shareholders Who Purchased FNM's (BIT:FNM) Stock Three Years Be Happy With The Share price Today?

While it may not be enough for some shareholders, we think it is good to see the FNM S.p.A. (BIT:FNM) share price up 19% in a single quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 34% in the last three years, falling well short of the market return.

Check out our latest analysis for FNM

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

FNM saw its EPS decline at a compound rate of 32% per year, over the last three years. This fall in the EPS is worse than the 13% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

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

This free interactive report on FNM's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We've already covered FNM's share price action, but we should also mention its total shareholder return (TSR). 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. Its history of dividend payouts mean that FNM's TSR, which was a 29% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

We regret to report that FNM shareholders are down 28% for the year. Unfortunately, that's worse than the broader market decline of 9.3%. 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. Longer term investors wouldn't be so upset, since they would have made 9%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand FNM better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for FNM you should be aware of, and 1 of them is potentially serious.

But note: FNM 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 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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