Yahoo Finance Associated British Foods (LON:ABF) Share Prices Have Dropped 26% In The Last Five Years
It is doubtless a positive to see that the Associated British Foods plc (LON:ABF) share price has gained some 33% in the last three months. But over the last half decade, the stock has not performed well. After all, the share price is down 26% in that time, significantly under-performing the market.
Check out our latest analysis for Associated British Foods
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 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.
Looking back five years, both Associated British Foods' share price and EPS declined; the latter at a rate of 2.9% per year. Readers should note that the share price has fallen faster than the EPS, at a rate of 6% per year, over the period. So it seems the market was too confident about the business, in the past.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free interactive report on Associated British Foods' 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'd be remiss not to mention the difference between Associated British Foods' total shareholder return (TSR) and its 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. Dividends have been really beneficial for Associated British Foods shareholders, and that cash payout explains why its total shareholder loss of 21%, over the last 5 years, isn't as bad as the share price return.
A Different Perspective
We regret to report that Associated British Foods shareholders are down 15% for the year. Unfortunately, that's worse than the broader market decline of 4.1%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Associated British Foods that you should be aware of before investing here.
Associated British Foods is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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