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While it may not be enough for some shareholders, we think it is good to see the Deutsche Wohnen SE (ETR:DWNI) share price up 12% in a single quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 42% in the last three years, falling well short of the market return.
Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.
Check out our latest analysis for Deutsche Wohnen
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.
Deutsche Wohnen has made a profit in the past. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. Other metrics may better explain the share price move.
With a rather small yield of just 0.2% we doubt that the stock's share price is based on its dividend. We think that the revenue decline over three years, at a rate of 28% per year, probably had some shareholders looking to sell. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Deutsche Wohnen in this interactive graph of future profit estimates.
A Different Perspective
Deutsche Wohnen shareholders have received returns of 11% over twelve months (even including dividends), which isn't far from the general market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 5%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for Deutsche Wohnen. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Deutsche Wohnen is showing 1 warning sign in our investment analysis , you should know about...