Yahoo Finance The five-year shareholder returns and company earnings persist lower as Temenos (VTX:TEMN) stock falls a further 5.6% in past week
We think intelligent long term investing is the way to go. But unfortunately, some companies simply don't succeed. For example the Temenos AG (VTX:TEMN) share price dropped 55% over five years. That is extremely sub-optimal, to say the least. Furthermore, it's down 20% in about a quarter. That's not much fun for holders.
Since Temenos has shed CHF268m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
View our latest analysis for Temenos
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 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.
During the five years over which the share price declined, Temenos' earnings per share (EPS) dropped by 5.1% each year. This reduction in EPS is less than the 15% annual reduction in the share price. This implies that the market was previously too optimistic about the stock.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Temenos has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
Temenos shareholders gained a total return of 6.2% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 9% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Temenos better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Temenos you should be aware of, and 1 of them is significant.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Swiss exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.