Yahoo Finance Volatility 101: Should Unilever Group (AMS:UNA) Shares Have Dropped 16%?
Most people feel a little frustrated if a stock they own goes down in price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. So while the The Unilever Group (AMS:UNA) share price is down 16% in the last year, the total return to shareholders (which includes dividends) was -14%. That's better than the market which returned -17% over the last year. At least the damage isn't so bad if you look at the last three years, since the stock is down 7.3% in that time. It's down 17% in about a quarter. Of course, this share price action may well have been influenced by the 23% decline in the broader market, throughout the period.
View our latest analysis for Unilever Group
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Unhappily, Unilever Group had to report a 38% decline in EPS over the last year. This fall in the EPS is significantly worse than the 16% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on Unilever Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Unilever Group, it has a TSR of -14% for the last year. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
While it's never nice to take a loss, Unilever Group shareholders can take comfort that , including dividends, their trailing twelve month loss of 14% wasn't as bad as the market loss of around 17%. Longer term investors wouldn't be so upset, since they would have made 5.2%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Unilever Group is showing 3 warning signs in our investment analysis , you should know about...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.
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