Stock Analysis

As Aperam (AMS:APAM) pops 10% this past week, investors may now be noticing the company's one-year earnings growth

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ENXTAM:APAM
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This week we saw the Aperam S.A. (AMS:APAM) share price climb by 10%. But that is minimal compensation for the share price under-performance over the last year. The cold reality is that the stock has dropped 46% in one year, under-performing the market.

While the last year has been tough for Aperam shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Before we look at the performance, you might like to know that our analysis indicates that APAM is potentially undervalued!

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.

Even though the Aperam share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.

It's fair to say that the share price does not seem to be reflecting the EPS growth. But we might find some different metrics explain the share price movements better.

Aperam's dividend seems healthy to us, so we doubt that the yield is a concern for the market. The revenue trend doesn't seem to explain why the share price is down. Unless, of course, the market was expecting a revenue uptick.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
ENXTAM:APAM Earnings and Revenue Growth September 13th 2022

Aperam is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Aperam the TSR over the last 1 year was -44%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While the broader market lost about 20% in the twelve months, Aperam shareholders did even worse, losing 44% (even including dividends). 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Aperam better, we need to consider many other factors. For instance, we've identified 4 warning signs for Aperam (2 are potentially serious) that you should be aware of.

But note: Aperam 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 NL exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Aperam is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About ENXTAM:APAM

Aperam

Aperam S.A., together with its subsidiaries, engages in the production and sale of stainless and specialty steel products worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth0
Past Performance5
Financial Health5
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with solid track record and pays a dividend.