HelloFresh (ETR:HFG) sheds €96m, company earnings and investor returns have been trending downwards for past three years
The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of HelloFresh SE (ETR:HFG) have had an unfortunate run in the last three years. So they might be feeling emotional about the 57% share price collapse, in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 40% lower in that time. Even worse, it's down 22% in about a month, which isn't fun at all.
If the past week is anything to go by, investor sentiment for HelloFresh isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
See our latest analysis for HelloFresh
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.
HelloFresh saw its EPS decline at a compound rate of 6.8% per year, over the last three years. The share price decline of 25% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
A Different Perspective
HelloFresh shareholders are down 40% for the year, but the market itself is up 5.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 7%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with HelloFresh (including 1 which shouldn't be ignored) .
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.
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