Yahoo Finance Investors Who Bought Balfour Beatty (LON:BBY) Shares A Year Ago Are Now Down 22%
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Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. For example, the Balfour Beatty plc (LON:BBY) share price is down 22% in the last year. That falls noticeably short of the market return of around -0.2%. However, the longer term returns haven't been so bad, with the stock down 6.3% in the last three years. Shareholders have had an even rougher run lately, with the share price down 20% in the last 90 days.
Check out our latest analysis for Balfour Beatty
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, Balfour Beatty had to report a 17% decline in EPS over the last year. The share price decline of 22% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 11.73 also points to the negative market sentiment.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Balfour Beatty has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Balfour Beatty stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Balfour Beatty's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Balfour Beatty's TSR, which was a 21% drop over the last year, was not as bad as the share price return.
A Different Perspective
While the broader market lost about 0.2% in the twelve months, Balfour Beatty shareholders did even worse, losing 21% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 1.3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on Balfour Beatty it might be wise to click here to see if insiders have been buying or selling shares.
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.
