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It’s easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Stalprodukt S.A. (WSE:STP) share price slid 45% over twelve months. That contrasts poorly with the market return of -3.3%. At least the damage isn’t so bad if you look at the last three years, since the stock is down 21% in that time. Even worse, it’s down 30% in about a month, which isn’t fun at all. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Unfortunately Stalprodukt reported an EPS drop of 22% for the last year. The share price decline of 45% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. The P/E ratio of 6.31 also points to the negative market sentiment.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Stalprodukt’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 Stalprodukt’s share price action, but we should also mention its total shareholder return (TSR). 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 Stalprodukt’s TSR, which was a 45% drop over the last year, was not as bad as the share price return.
A Different Perspective
While the broader market lost about 3.3% in the twelve months, Stalprodukt shareholders did even worse, losing 45% (even including dividends). 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. Longer term investors wouldn’t be so upset, since they would have made 2.8%, 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. Is Stalprodukt cheap compared to other companies? These 3 valuation measures might help you decide.
But note: Stalprodukt 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 PL 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.