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Volatility 101: Should Aventus Group (ASX:AVN) Shares Have Dropped 27%?

Aventus Group (ASX:AVN) shareholders should be happy to see the share price up 11% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 27% in the last three years, falling well short of the market return.

View our latest analysis for Aventus Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, Aventus Group's earnings per share (EPS) dropped by 15% each year. In comparison the 10% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

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

ASX:AVN Past and Future Earnings May 10th 2020
ASX:AVN Past and Future Earnings May 10th 2020

It might be well worthwhile taking a look at our free report on Aventus Group's earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Aventus Group the TSR over the last 3 years was -9.9%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

The last twelve months weren't great for Aventus Group shares, which performed worse than the market, costing holders 17% , including dividends . Meanwhile, the broader market slid about 11%, likely weighing on the stock. The three-year loss of 3.4% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. It's always interesting to track share price performance over the longer term. But to understand Aventus Group better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Aventus Group (of which 1 can't be ignored!) you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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.

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. Thank you for reading.

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