Yahoo Finance The one-year loss for ZIM Integrated Shipping Services (NYSE:ZIM) shareholders likely driven by its shrinking earnings
It is a pleasure to report that the ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is up 39% in the last quarter. But that's small comfort given the dismal price performance over the last year. Specifically, the stock price slipped by 65% in that time. Some might say the recent bounce is to be expected after such a bad drop. Of course, it could be that the fall was overdone.
The recent uptick of 5.3% could be a positive sign of things to come, so let's take a look at historical fundamentals.
View our latest analysis for ZIM Integrated Shipping Services
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.
Unhappily, ZIM Integrated Shipping Services had to report a 4.5% decline in EPS over the last year. This reduction in EPS is not as bad as the 65% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 0.61 also points to the negative market sentiment.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that ZIM Integrated Shipping Services has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling ZIM Integrated Shipping Services stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for ZIM Integrated Shipping Services the TSR over the last 1 year was -54%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
We doubt ZIM Integrated Shipping Services shareholders are happy with the loss of 54% over twelve months (even including dividends). That falls short of the market, which lost 11%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. Putting aside the last twelve months, it's good to see the share price has rebounded by 39%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that ZIM Integrated Shipping Services is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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
