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We think intelligent long term investing is the way to go. But along the way some stocks are going to perform badly. Zooming in on an example, the Capital & Counties Properties PLC (LON:CAPC) share price dropped 54% in the last half decade. We certainly feel for shareholders who bought near the top. Furthermore, it's down 13% in about a quarter. That's not much fun for holders. Of course, this share price action may well have been influenced by the 32% decline in the broader market, throughout the period.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for Capital & Counties Properties
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 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 five years of share price growth, Capital & Counties Properties moved from a loss to profitability. Most would consider that to be a good thing, so it's counter-intuitive to see the share price declining. Other metrics may better explain the share price move.
The modest 1.4% dividend yield is unlikely to be guiding the market view of the stock. Arguably, the revenue drop of 6.5% a year for half a decade suggests that the company can't grow in the long term. This has probably encouraged some shareholders to sell down the stock.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We know that Capital & Counties Properties has improved its bottom line lately, but what does the future have in store? So we recommend checking out this free report showing consensus forecasts
A Different Perspective
While it's certainly disappointing to see that Capital & Counties Properties shares lost 14% throughout the year, that wasn't as bad as the market loss of 47%. What is more upsetting is the 9% per annum loss investors have suffered over the last half decade. While the losses are slowing we doubt many shareholders are happy with the stock. 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. To that end, you should learn about the 2 warning signs we've spotted with Capital & Counties Properties (including 1 which is potentially serious) .