Yahoo Finance Introducing Amigo Holdings (LON:AMGO), The Stock That Dropped 46% In The Last Year
The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Amigo Holdings PLC (LON:AMGO) share price is down 46% in the last year. That falls noticeably short of the market return of around -1.3%. We wouldn't rush to judgement on Amigo Holdings because we don't have a long term history to look at. Furthermore, it's down 31% in about a quarter. That's not much fun for holders.
View our latest analysis for Amigo Holdings
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).
During the unfortunate twelve months during which the Amigo Holdings share price fell, it actually saw its earnings per share (EPS) improve by 54%. It could be that the share price was previously over-hyped. The divergence between the EPS and the share price is quite notable, during the year. So it's well worth checking out some other metrics, too.
We don't see any weakness in the Amigo Holdings's dividend so the steady payout can't really explain the share price drop. From what we can see, revenue is pretty flat, so that doesn't really explain the share price drop. Of course, it could simply be that it simply fell short of the market consensus expectations.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Amigo Holdings has grown profits over the years, but the future is more important for shareholders. This free interactive report on Amigo Holdings's balance sheet strength is a great place to start, if you want to investigate the stock further.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Amigo Holdings, it has a TSR of -44% for the last year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Amigo Holdings shareholders are down 44% for the year (even including dividends), even worse than the market loss of 1.3%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 31% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Importantly, we haven't analysed Amigo Holdings's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
If you are like me, then you will 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 GB 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.
