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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term Betsson AB (STO:BETS B) shareholders, since the share price is down 41% in the last three years, falling well short of the market return of around 34%. Furthermore, it's down 11% in about a quarter. That's not much fun for holders.
See our latest analysis for Betsson
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 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.
Although the share price is down over three years, Betsson actually managed to grow EPS by 9.0% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed. It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.
It's quite likely that the declining dividend has caused some investors to sell their shares, pushing the price lower in the process. It doesn't seem like the changes in revenue would have impacted the share price much, but a closer inspection of the data might reveal something.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
We know that Betsson has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Betsson will earn in the future (free profit forecasts)
A Different Perspective
Betsson shareholders have received returns of 13% over twelve months (even including dividends), which isn't far from the general market return. The silver lining is that the share price is up in the short term, which flies in the face of the annualised loss of 0.4% over the last five years. While 'turnarounds seldom turn' there are green shoots for Betsson. Before forming an opinion on Betsson you might want to consider the cold hard cash it pays as a dividend. This free chart tracks its dividend over time.