The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in SJR in Scandinavia AB (publ) (STO:SJR B) have tasted that bitter downside in the last year, as the share price dropped 48%. That's well bellow the market return of 2.6%. At least the damage isn't so bad if you look at the last three years, since the stock is down 28% in that time. Unfortunately the share price momentum is still quite negative, with prices down 27% in thirty days.
View our latest analysis for SJR in Scandinavia
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...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately SJR in Scandinavia reported an EPS drop of 21% for the last year. The share price decline of 48% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 11.23.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into SJR in Scandinavia's key metrics by checking this interactive graph of SJR in Scandinavia's earnings, revenue and cash flow.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for SJR in Scandinavia the TSR over the last year was -45%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
While the broader market gained around 2.6% in the last year, SJR in Scandinavia shareholders lost 45% (even including dividends). 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. Longer term investors wouldn't be so upset, since they would have made 5.2%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before spending more time on SJR in Scandinavia it might be wise to click here to see if insiders have been buying or selling shares.