In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Hornbach Holding AG & Co. KGaA (FRA:HBH) shareholders over the last year, as the share price declined 31%. That contrasts poorly with the market return of -8.0%. Taking the longer term view, the stock fell 27% over the last three years. It's up 3.3% in the last seven days.
See our latest analysis for Hornbach Holding KGaA
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Unfortunately Hornbach Holding KGaA reported an EPS drop of 20% for the last year. This reduction in EPS is not as bad as the 31% share price fall. So it seems the market was too confident about the business, a year ago. The less favorable sentiment is reflected in its current P/E ratio of 11.19.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Hornbach Holding KGaA's key metrics by checking this interactive graph of Hornbach Holding KGaA's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We've already covered Hornbach Holding KGaA'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. Hornbach Holding KGaA's TSR of was a loss of 29% for the year. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
The last twelve months weren't great for Hornbach Holding KGaA shares, which performed worse than the market, costing holders 29%, including dividends. The market shed around 8.0%, no doubt weighing on the stock price. The three-year loss of 7.9% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. Keeping this in mind, a solid next step might be to take a look at Hornbach Holding KGaA's dividend track record. This free interactive graph is a great place to start.