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If You Had Bought ProSiebenSat.1 Media (ETR:PSM) Stock Three Years Ago, You’d Be Sitting On A 70% Loss, Today

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The truth is that if you invest for long enough, you’re going to end up with some losing stocks. Long term ProSiebenSat.1 Media SE (ETR:PSM) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 70% in that time. And the ride hasn’t got any smoother in recent times over the last year, with the price 51% lower in that time. On top of that, the share price has dropped a further 15% in a month. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.

See our latest analysis for ProSiebenSat.1 Media

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 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.

During the three years that the share price fell, ProSiebenSat.1 Media’s earnings per share (EPS) dropped by 16% each year. The share price decline of 33% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

XTRA:PSM Past and Future Earnings, March 26th 2019
XTRA:PSM Past and Future Earnings, March 26th 2019

Dive deeper into ProSiebenSat.1 Media’s key metrics by checking this interactive graph of ProSiebenSat.1 Media’s earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for ProSiebenSat.1 Media the TSR over the last 3 years was -65%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market lost about 4.9% in the twelve months, ProSiebenSat.1 Media shareholders did even worse, losing 48% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 12% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before forming an opinion on ProSiebenSat.1 Media you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.

We will like ProSiebenSat.1 Media better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.