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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But if you try your hand at stock picking, your risk returning less than the market. Unfortunately, that's been the case for longer term Bergman & Beving AB (STO:BERG B) shareholders, since the share price is down 40% in the last three years, falling well short of the market return of around 38%. The silver lining is that the stock is up 3.3% in about a week.
See our latest analysis for Bergman & Beving
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 three years that the share price fell, Bergman & Beving's earnings per share (EPS) dropped by 21% each year. In comparison the 16% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We know that Bergman & Beving has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Bergman & Beving will grow revenue in the future.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Bergman & Beving the TSR over the last 3 years was -0.3%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Bergman & Beving provided a TSR of 9.1% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 1.4% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. Before spending more time on Bergman & Beving it might be wise to click here to see if insiders have been buying or selling shares.