Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of Wallenius Wilhelmsen ASA (OB:WALWIL) have suffered share price declines over the last year. The share price has slid 52% in that time. Even if you look out three years, the returns are still disappointing, with the share price down (the share price is down 30%) in that time. Shareholders have had an even rougher run lately, with the share price down 14% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unhappily, Wallenius Wilhelmsen had to report a 61% decline in EPS over the last year. This proportional reduction in earnings per share isn’t far from the 52% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It might be well worthwhile taking a look at our free report on Wallenius Wilhelmsen’s earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We’ve already covered Wallenius Wilhelmsen’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. Dividends have been really beneficial for Wallenius Wilhelmsen shareholders, and that cash payout explains why its total shareholder loss of 52%, over the last year, isn’t as bad as the share price return.
A Different Perspective
Wallenius Wilhelmsen shareholders are down 52% for the year (even including dividends), but the market itself is up 10.0%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 12% over the last half decade. We realise that Buffett 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 businesses. Before spending more time on Wallenius Wilhelmsen it might be wise to click here to see if insiders have been buying or selling shares.
We will like Wallenius Wilhelmsen 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 NO exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.