Europcar Mobility Group S.A. (EPA:EUCAR) shareholders should be happy to see the share price up 22% in the last quarter. But that is small recompense for the exasperating returns over three years. Indeed, the share price is down a tragic 56% in the last three years. Some might say the recent bounce is to be expected after such a bad drop. Perhaps the company has turned over a new leaf.
View our latest analysis for Europcar Mobility Group
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 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).
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. As it happens, Europcar Mobility Group's TSR for the last 3 years was -52%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Europcar Mobility Group shareholders are down 40% for the year (even including dividends) , but the broader market is up 23%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 22% 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. 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. It's always interesting to track share price performance over the longer term. But to understand Europcar Mobility Group better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Europcar Mobility Group (of which 1 is significant!) you should know about.
Of course Europcar Mobility Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FR exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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