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It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the Cellularline S.p.A. (BIT:CELL) share price slid 17% over twelve months. That's well bellow the market return of 2.8%. Cellularline may have better days ahead, of course; we've only looked at a one year period.
See our latest analysis for Cellularline
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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 the last year Cellularline saw its earnings per share increase strongly. The rate of growth may not be sustainable, but it is still really positive. As you can imagine, the share price action therefore perturbs us. So it's worth taking a look at some other metrics.
We don't see any weakness in the Cellularline's dividend so the steady payout can't really explain the share price drop. We'd be more worried about the fact that revenue fell 7.0% year on year. So it seems likely that the weak revenue is making the market more cautious about the stock.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We know that Cellularline has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Cellularline's financial health with this free report on its balance sheet.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. 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. As it happens, Cellularline's TSR for the last year was -13%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
While Cellularline shareholders are down 13% for the year (even including dividends), the market itself is up 2.8%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 1.4% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Importantly, we haven't analysed Cellularline's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.