The one-year shareholder returns and company earnings persist lower as Skåne-möllan (STO:SKMO) stock falls a further 16% in past week

Investors can approximate the average 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. For example, the Skåne-möllan AB (publ) (STO:SKMO) share price is down 47% in the last year. That's disappointing when you consider the market returned 18%. However, the longer term returns haven't been so bad, with the stock down 15% in the last three years. More recently, the share price has dropped a further 16% in a month. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Since Skåne-möllan has shed kr106m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Skåne-möllan

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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, Skåne-möllan had to report a 29% decline in EPS over the last year. The share price decline of 47% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It might be well worthwhile taking a look at our free report on Skåne-möllan's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 18% in the last year, Skåne-möllan shareholders lost 46% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Skåne-möllan , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.