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Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. To wit, the MaxiTRANS Industries Limited (ASX:MXI) share price managed to fall 72% over five long years. That's an unpleasant experience for long term holders. And we doubt long term believers are the only worried holders, since the stock price has declined 53% over the last twelve months. Furthermore, it's down 16% in about a quarter. That's not much fun for holders.
See our latest analysis for MaxiTRANS Industries
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
In the last half decade MaxiTRANS Industries saw its share price fall as its EPS declined below zero. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. But we would generally expect a lower price, given the situation.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on MaxiTRANS Industries's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We've already covered MaxiTRANS Industries's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that MaxiTRANS Industries's TSR, which was a 66% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
MaxiTRANS Industries shareholders are down 53% for the year, but the market itself is up 14%. 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 19% per year over five years. We realise that Buffett 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 businesses. Before spending more time on MaxiTRANS Industries it might be wise to click here to see if insiders have been buying or selling shares.