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Buying a low-cost index fund will get you the average market return. But across the board there are plenty of stocks that underperform the market. That's what has happened with the NÜRNBERGER Beteiligungs-AG (ETR:NBG6) share price. It's up 13% over three years, but that is below the market return. Unfortunately, the share price has fallen 5.1% over twelve months.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
View our latest analysis for NÜRNBERGER Beteiligungs-AG
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
During three years of share price growth, NÜRNBERGER Beteiligungs-AG achieved compound earnings per share growth of 0.8% per year. In comparison, the 4% per year gain in the share price outpaces the EPS growth. So it's fair to assume the market has a higher opinion of the business than it did three years ago. It's not unusual to see the market 're-rate' a stock, after a few years of growth.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into NÜRNBERGER Beteiligungs-AG's key metrics by checking this interactive graph of NÜRNBERGER Beteiligungs-AG's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of NÜRNBERGER Beteiligungs-AG, it has a TSR of 28% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
While it's certainly disappointing to see that NÜRNBERGER Beteiligungs-AG shares lost 0.6% throughout the year, that wasn't as bad as the market loss of 1.3%. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. 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. Take risks, for example - NÜRNBERGER Beteiligungs-AG has 2 warning signs (and 1 which is significant) we think you should know about.