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JOST Werke AG (ETR:JST) shareholders should be happy to see the share price up 13% in the last month. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 16% in a year, falling short of the returns you could get by investing in an index fund.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Unhappily, JOST Werke had to report a 23% decline in EPS over the last year. The share price fall of 16% isn't as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It is of course excellent to see how JOST Werke has grown profits over the years, but the future is more important for shareholders. This free interactive report on JOST Werke's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of JOST Werke, it has a TSR of -13% for the last year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
JOST Werke shareholders are down 13% for the year (even including dividends), even worse than the market loss of 1.6%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Notably, the loss over the last year isn't as bad as the 17% drop in the last three months. So it seems like some holders have been dumping the stock of late - and that's not bullish. Importantly, we haven't analysed JOST Werke's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
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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