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Every investor on earth makes bad calls sometimes. But really bad investments should be rare. So spare a thought for the long term shareholders of MaxiTRANS Industries Limited (ASX:MXI); the share price is down a whopping 80% in the last three years. That'd be enough to cause even the strongest minds some disquiet. And the ride hasn't got any smoother in recent times over the last year, with the price 48% lower in that time. The falls have accelerated recently, with the share price down 32% in the last three months. Of course, this share price action may well have been influenced by the 16% decline in the broader market, throughout the period.
Check out our latest analysis for MaxiTRANS Industries
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...' 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).
MaxiTRANS Industries saw its share price decline over the three years in which its EPS also dropped, falling to a loss. Due to the loss, it's not easy to use EPS as a reliable guide to the business. But it's safe to say we'd generally expect the share price to be lower as a result!
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on MaxiTRANS Industries's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We've already covered MaxiTRANS Industries'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. Dividends have been really beneficial for MaxiTRANS Industries shareholders, and that cash payout explains why its total shareholder loss of 78%, over the last 3 years, isn't as bad as the share price return.
A Different Perspective
We regret to report that MaxiTRANS Industries shareholders are down 48% for the year. Unfortunately, that's worse than the broader market decline of 4.9%. 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with MaxiTRANS Industries , and understanding them should be part of your investment process.