The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Massimo Zanetti Beverage Group S.p.A. (BIT:MZB) shareholders over the last year, as the share price declined 18%. That contrasts poorly with the market return of 3.9%. Looking at the longer term, the stock is down 16% over three years.
See our latest analysis for Massimo Zanetti Beverage Group
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).
Unhappily, Massimo Zanetti Beverage Group had to report a 22% decline in EPS over the last year. The share price fall of 18% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Massimo Zanetti Beverage Group the TSR over the last year was -16%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Over the last year, Massimo Zanetti Beverage Group shareholders took a loss of 16% , including dividends . In contrast the market gained about 3.9%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 3.4% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Keeping this in mind, a solid next step might be to take a look at Massimo Zanetti Beverage Group's dividend track record. This free interactive graph is a great place to start.