In This Article:
NNIT A/S (CPH:NNIT) shareholders should be happy to see the share price up 20% in the last month. Meanwhile over the last three years the stock has dropped hard. Indeed, the share price is down a tragic 61% in the last three years. So it's good to see it climbing back up. While many would remain nervous, there could be further gains if the business can put its best foot forward.
View our latest analysis for NNIT
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the three years that the share price fell, NNIT's earnings per share (EPS) dropped by 1.0% each year. This reduction in EPS is slower than the 27% annual reduction in the share price. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 10.06.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into NNIT's key metrics by checking this interactive graph of NNIT's earnings, revenue and cash flow.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for NNIT the TSR over the last 3 years was -57%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
The last twelve months weren't great for NNIT shares, which cost holders 49% , including dividends , while the market was up about 11%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 25% 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. Importantly, we haven't analysed NNIT's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.