Malmbergs Elektriska (STO:MEAB B) Share Prices Have Dropped 64% In The Last Five Years

Statistically speaking, long term investing is a profitable endeavour. But no-one is immune from buying too high. Zooming in on an example, the Malmbergs Elektriska AB (publ) (STO:MEAB B) share price dropped 64% in the last half decade. That is extremely sub-optimal, to say the least. The silver lining is that the stock is up 3.6% in about a week.

See our latest analysis for Malmbergs Elektriska

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.

Looking back five years, both Malmbergs Elektriska's share price and EPS declined; the latter at a rate of 18% per year. In this case, the EPS change is really very close to the share price drop of 18% a year. This suggests that market participants have not changed their view of the company all that much. So it's fair to say the share price has been responding to changes in EPS.

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

Dive deeper into Malmbergs Elektriska's key metrics by checking this interactive graph of Malmbergs Elektriska's earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Malmbergs Elektriska's TSR for the last 5 years was -56%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Malmbergs Elektriska shareholders gained a total return of 18% during the year. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 9% per year, over five years. So this might be a sign the business has turned its fortunes around. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 4 warning signs we've spotted with Malmbergs Elektriska (including 1 which doesn't sit too well with us) .

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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