Advertisement
UK markets close in 3 hours 3 minutes
  • FTSE 100

    7,951.96
    +19.98 (+0.25%)
     
  • FTSE 250

    19,858.44
    +47.78 (+0.24%)
     
  • AIM

    743.10
    +0.99 (+0.13%)
     
  • GBP/EUR

    1.1692
    +0.0023 (+0.19%)
     
  • GBP/USD

    1.2636
    -0.0003 (-0.02%)
     
  • Bitcoin GBP

    55,998.99
    -460.43 (-0.82%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,248.49
    +44.91 (+0.86%)
     
  • DOW

    39,760.08
    +477.75 (+1.22%)
     
  • CRUDE OIL

    82.40
    +1.05 (+1.29%)
     
  • GOLD FUTURES

    2,233.40
    +20.70 (+0.94%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,490.22
    +13.13 (+0.07%)
     
  • CAC 40

    8,223.82
    +19.01 (+0.23%)
     

If You Had Bought ABN AMRO Group (AMS:ABN) Stock A Year Ago, You'd Be Sitting On A 19% Loss, Today

The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in ABN AMRO Group N.V. (AMS:ABN) have tasted that bitter downside in the last year, as the share price dropped 19%. That contrasts poorly with the market return of 5.9%. On the other hand, the stock is actually up 11% over three years. There was little comfort for shareholders in the last week as the price declined a further 5.0%.

See our latest analysis for ABN AMRO Group

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.

ADVERTISEMENT

Unfortunately ABN AMRO Group reported an EPS drop of 19% for the last year. Remarkably, he share price decline of 19% per year is particularly close to the EPS drop. So it seems that the market sentiment has not changed much, despite the weak results. Instead, the change in the share price seems to reduction in earnings per share, alone.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

ENXTAM:ABN Past and Future Earnings, April 28th 2019
ENXTAM:ABN Past and Future Earnings, April 28th 2019

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on ABN AMRO 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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for ABN AMRO Group the TSR over the last year was -10%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

ABN AMRO Group shareholders are down 10% for the year (even including dividends), but the broader market is up 5.9%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Investors are up over three years, booking 11% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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