Investors in American Axle & Manufacturing Holdings (NYSE:AXL) have unfortunately lost 51% over the last five years
Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. Zooming in on an example, the American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) share price dropped 51% in the last half decade. We certainly feel for shareholders who bought near the top. Contrary to the longer term story, the last month has been good for stockholders, with a share price gain of 9.5%.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
Check out our latest analysis for American Axle & Manufacturing Holdings
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
American Axle & Manufacturing Holdings became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.
It could be that the revenue decline of 7.3% per year is viewed as evidence that American Axle & Manufacturing Holdings is shrinking. This has probably encouraged some shareholders to sell down the stock.
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 American Axle & Manufacturing Holdings has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on American Axle & Manufacturing Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
While the broader market gained around 11% in the last year, American Axle & Manufacturing Holdings shareholders lost 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 9% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - American Axle & Manufacturing Holdings has 3 warning signs (and 1 which is significant) we think you should know about.
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 American 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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