U.S. markets closed
  • S&P 500

    4,232.60
    +30.98 (+0.74%)
     
  • Dow 30

    34,777.76
    +229.23 (+0.66%)
     
  • Nasdaq

    13,752.24
    +119.39 (+0.88%)
     
  • Russell 2000

    2,271.63
    +30.21 (+1.35%)
     
  • Crude Oil

    64.82
    +0.11 (+0.17%)
     
  • Gold

    1,832.00
    +16.30 (+0.90%)
     
  • Silver

    27.57
    +0.10 (+0.38%)
     
  • EUR/USD

    1.2167
    +0.0098 (+0.82%)
     
  • 10-Yr Bond

    1.5770
    +0.0160 (+1.02%)
     
  • GBP/USD

    1.3990
    +0.0098 (+0.70%)
     
  • USD/JPY

    108.5400
    -0.5450 (-0.50%)
     
  • BTC-USD

    58,759.10
    +1,582.12 (+2.77%)
     
  • CMC Crypto 200

    1,480.07
    +44.28 (+3.08%)
     
  • FTSE 100

    7,129.71
    +53.54 (+0.76%)
     
  • Nikkei 225

    29,357.82
    +26.45 (+0.09%)
     

Some Salzgitter (ETR:SZG) Shareholders Have Copped A Big 64% Share Price Drop

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Salzgitter AG (ETR:SZG) have suffered share price declines over the last year. To wit the share price is down 64% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 54% in the last three years. Furthermore, it's down 30% in about a quarter. That's not much fun for holders.

Check out our latest analysis for Salzgitter

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. 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, Salzgitter had to report a 10% decline in EPS over the last year. This reduction in EPS is not as bad as the 64% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The P/E ratio of 3.34 also points to the negative market sentiment.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

XTRA:SZG Past and Future Earnings, October 10th 2019
XTRA:SZG Past and Future Earnings, October 10th 2019

It is of course excellent to see how Salzgitter has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Salzgitter's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for Salzgitter shareholders, and that cash payout explains why its total shareholder loss of 63%, over the last year, isn't as bad as the share price return.

A Different Perspective

Investors in Salzgitter had a tough year, with a total loss of 63% (including dividends) , against a market gain of about 1.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7.4% 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. Importantly, we haven't analysed Salzgitter's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.

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.