Yahoo Finance Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA) shareholders have endured a 62% loss from investing in the stock five years ago
We think intelligent long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. To wit, the Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA) share price managed to fall 71% over five long years. We certainly feel for shareholders who bought near the top.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
View our latest analysis for Loma Negra Compañía Industrial Argentina Sociedad Anónima
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Looking back five years, both Loma Negra Compañía Industrial Argentina Sociedad Anónima's share price and EPS declined; the latter at a rate of 12% per year. This reduction in EPS is less than the 22% annual reduction in the share price. This implies that the market is more cautious about the business these days. Of course, with a P/E ratio of 77.33, the market remains optimistic.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Loma Negra Compañía Industrial Argentina Sociedad Anónima's TSR for the last 5 years was -62%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
It's nice to see that Loma Negra Compañía Industrial Argentina Sociedad Anónima shareholders have received a total shareholder return of 40% over the last year. And that does include the dividend. Notably the five-year annualised TSR loss of 10% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Loma Negra Compañía Industrial Argentina Sociedad Anónima better, we need to consider many other factors. Even so, be aware that Loma Negra Compañía Industrial Argentina Sociedad Anónima is showing 2 warning signs in our investment analysis , you should know about...
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 US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
