Yahoo Finance Investors five-year losses continue as Fresenius SE KGaA (ETR:FRE) dips a further 3.8% this week, earnings continue to decline
The main aim of stock picking is to find the market-beating stocks. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in Fresenius SE & Co. KGaA (ETR:FRE), since the last five years saw the share price fall 40%.
Since Fresenius SE KGaA has shed €614m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Fresenius SE KGaA
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. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Looking back five years, both Fresenius SE KGaA's share price and EPS declined; the latter at a rate of 31% per year. This fall in the EPS is worse than the 10% compound annual share price fall. So investors might expect EPS to bounce back -- or they may have previously foreseen the EPS decline. The high P/E ratio of 49.88 suggests that shareholders believe earnings will grow in the years ahead.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Fresenius SE KGaA's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Dividend Lost
It's important to keep in mind that we've been talking about the share price returns, which don't include dividends, while the total shareholder return does. By accounting for the value of dividends paid, the TSR can be seen as a more complete measure of the value a company brings to its shareholders. Fresenius SE KGaA's TSR over the last 5 years is -34%; better than its share price return. Even though the company isn't paying dividends at the moment, it has done in the past.
A Different Perspective
Fresenius SE KGaA provided a TSR of 2.4% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 6% endured over half a decade. So this might be a sign the business has turned its fortunes around. 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. Even so, be aware that Fresenius SE KGaA is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German 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.
