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We think intelligent long term investing is the way to go. But no-one is immune from buying too high. For example, after five long years the Sedlmayr Grund und Immobilien AG (FRA:SPB) share price is a whole 65% lower. We certainly feel for shareholders who bought near the top. And it's not just long term holders hurting, because the stock is down 37% in the last year. On the other hand the share price has bounced 6.2% over the last week.
The recent uptick of 6.2% could be a positive sign of things to come, so let's take a look at historical fundamentals.
View our latest analysis for Sedlmayr Grund und Immobilien
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 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.
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 Sedlmayr Grund und Immobilien the TSR over the last 5 years was -62%, 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
While the broader market gained around 7.2% in the last year, Sedlmayr Grund und Immobilien shareholders lost 35% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 4 warning signs for Sedlmayr Grund und Immobilien (2 don't sit too well with us!) that you should be aware of before investing here.
But note: Sedlmayr Grund und Immobilien may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).