Yahoo Finance Such Is Life: How Neways Electronics International (AMS:NEWAY) Shareholders Saw Their Shares Drop 52%
Neways Electronics International N.V. (AMS:NEWAY) shareholders should be happy to see the share price up 15% in the last month. But that isn't much consolation to those who have suffered through the declines of the last year. Specifically, the stock price slipped by 52% in that time. Some might say the recent bounce is to be expected after such a bad drop. Of course, it could be that the fall was overdone.
See our latest analysis for Neways Electronics International
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.
Unhappily, Neways Electronics International had to report a 42% decline in EPS over the last year. This proportional reduction in earnings per share isn't far from the 52% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price has approximately tracked EPS growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Neways Electronics International's total shareholder return (TSR) and its share price change, which we've covered above. 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 Neways Electronics International's TSR, which was a 52% drop over the last year, was not as bad as the share price return.
A Different Perspective
We regret to report that Neways Electronics International shareholders are down 52% for the year (even including dividends) . Unfortunately, that's worse than the broader market decline of 15%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4.5% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Neways Electronics International better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for Neways Electronics International you should be aware of.
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 NL 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.
