BHG Group (STO:BHG) sheds kr771m, company earnings and investor returns have been trending downwards for past year

By
Simply Wall St
Published
May 13, 2022
OM:BHG
Source: Shutterstock

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of BHG Group AB (publ) (STO:BHG) have suffered share price declines over the last year. To wit the share price is down 61% in that time. Longer term investors have fared much better, since the share price is up 48% in three years. Shareholders have had an even rougher run lately, with the share price down 41% in the last 90 days. But this could be related to the weak market, which is down 17% in the same period.

With the stock having lost 8.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

See our latest analysis for BHG Group

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Unfortunately BHG Group reported an EPS drop of 11% for the last year. The share price decline of 61% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth
OM:BHG Earnings Per Share Growth May 13th 2022

We know that BHG Group has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on BHG Group's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

BHG Group shareholders are down 61% for the year, falling short of the market return. Meanwhile, the broader market slid about 9.7%, likely weighing on the stock. Fortunately the longer term story is brighter, with total returns averaging about 14% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. 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. For instance, we've identified 3 warning signs for BHG Group (1 doesn't sit too well with us) that you should be aware of.

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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.