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If you love investing in stocks you're bound to buy some losers. But long term Polimex-Mostostal S.A. (WSE:PXM) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 57% drop in the share price over that period. The more recent news is of little comfort, with the share price down 31% in a year. Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days.
See our latest analysis for Polimex-Mostostal
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.
Polimex-Mostostal became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move.
Arguably the revenue decline of 13% per year has people thinking Polimex-Mostostal is shrinking. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We regret to report that Polimex-Mostostal shareholders are down 31% for the year. Unfortunately, that's worse than the broader market decline of 3.7%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 15% 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. Is Polimex-Mostostal cheap compared to other companies? These 3 valuation measures might help you decide.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.