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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. In contrast individual stocks will provide a wide range of possible returns, and may fall short. Unfortunately, that's been the case for longer term Mineralbrunnen Überkingen-Teinach GmbH & Co. KGaA (FRA:MUT) shareholders, since the share price is down 18% in the last three years, less than the market decline of around 7.3%.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
View our latest analysis for Mineralbrunnen Überkingen-Teinach GmbH KGaA
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?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Mineralbrunnen Überkingen-Teinach GmbH KGaA's TSR for the last 3 years was -8.7%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
Mineralbrunnen Überkingen-Teinach GmbH KGaA shareholders are down 10% for the year (even including dividends), but the market itself is up 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Mineralbrunnen Überkingen-Teinach GmbH KGaA (at least 1 which is concerning) , and understanding them should be part of your investment process.