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Statistically speaking, long term investing is a profitable endeavour. But that doesn't mean long term investors can avoid big losses. To wit, the SGL Carbon SE (ETR:SGL) share price managed to fall 72% over five long years. That is extremely sub-optimal, to say the least. We also note that the stock has performed poorly over the last year, with the share price down 54%. Furthermore, it's down 35% in about a quarter. That's not much fun for holders.
View our latest analysis for SGL Carbon
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. 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.
During five years of share price growth, SGL Carbon moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.
It could be that the revenue decline of 4.6% per year is viewed as evidence that SGL Carbon is shrinking. That could explain the weak share price.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
SGL Carbon is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for SGL Carbon in this interactive graph of future profit estimates.
What about the Total Shareholder Return (TSR)?
We've already covered SGL Carbon's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. We note that SGL Carbon's TSR, at -68% is higher than its share price return of -72%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
While the broader market lost about 2.3% in the twelve months, SGL Carbon shareholders did even worse, losing 54%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 20% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before forming an opinion on SGL Carbon you might want to consider these 3 valuation metrics.