Earnings growth of 10% over 3 years hasn't been enough to translate into positive returns for Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA) shareholders
As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA) shareholders have had that experience, with the share price dropping 40% in three years, versus a market return of about 50%. On top of that, the share price is down 11% in the last week.
After losing 11% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
See our latest analysis for Loma Negra Compañía Industrial Argentina Sociedad Anónima
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
During the unfortunate three years of share price decline, Loma Negra Compañía Industrial Argentina Sociedad Anónima actually saw its earnings per share (EPS) improve by 34% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.
Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
Revenue is actually up 12% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Loma Negra Compañía Industrial Argentina Sociedad Anónima further; while we may be missing something on this analysis, there might also be an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Loma Negra Compañía Industrial Argentina Sociedad Anónima has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Loma Negra Compañía Industrial Argentina Sociedad Anónima's TSR for the last 3 years was -32%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
We're pleased to report that Loma Negra Compañía Industrial Argentina Sociedad Anónima rewarded shareholders with a total shareholder return of 3.3% over the last year. That's including the dividend. What is absolutely clear is that is far preferable to the dismal 10% average annual loss suffered over the last three years. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. It's always interesting to track share price performance over the longer term. But to understand Loma Negra Compañía Industrial Argentina Sociedad Anónima better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Loma Negra Compañía Industrial Argentina Sociedad Anónima you should know about.
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 US 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.
