The three-year loss for Lentex (WSE:LTX) shareholders likely driven by its shrinking earnings

Simply Wall St · 10/17 04:02

Lentex S.A. (WSE:LTX) shareholders should be happy to see the share price up 23% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 20% in the last three years, falling well short of the market return.

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

Check out our latest analysis for Lentex

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years that the share price fell, Lentex's earnings per share (EPS) dropped by 15% each year. In comparison the 7% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
WSE:LTX Earnings Per Share Growth October 17th 2024

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

Lentex shareholders are up 14% for the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 4% over half a decade This could indicate that the company is winning over new investors, as it pursues its strategy. It's always interesting to track share price performance over the longer term. But to understand Lentex better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Lentex (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Polish exchanges.