Adler Modemärkte AG (ETR:ADD) shareholders should be happy to see the share price up 12% in the last month. But that doesn't change the fact that the returns over the last half decade have been disappointing. Indeed, the share price is down 72% in the period. So we're hesitant to put much weight behind the short term increase. We'd err towards caution given the long term under-performance.
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...' 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.
Adler Modemärkte became profitable within the last five years. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics might give us a better handle on how its value is changing over time.
The revenue decline of 1.9% isn't too bad. But if the market expected durable top line growth, then that could explain the share price weakness.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that Adler Modemärkte has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Adler Modemärkte in this interactive graph of future profit estimates.
What about the Total Shareholder Return (TSR)?
We've already covered Adler Modemärkte's share price action, but we should also mention its 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. Adler Modemärkte's TSR of was a loss of 69% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
Adler Modemärkte shareholders gained a total return of 1.8% 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 21% per year, over five years. It could well be that the business is stabilizing. Before forming an opinion on Adler Modemärkte you might want to consider these 3 valuation metrics.
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 DE exchanges.
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