Introducing Fidere Patrimonio Socimi (BME:YFID), The Stock That Dropped 43% In The Last Three Years

Investors are understandably disappointed when a stock they own declines in value. But it can difficult to make money in a declining market. While the Fidere Patrimonio Socimi, S.A. (BME:YFID) share price is down 43% in the last three years, the total return to shareholders (which includes dividends) was -11%. That's better than the market which returned -27% over the last three years.

View our latest analysis for Fidere Patrimonio Socimi

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. 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 five years of share price growth, Fidere Patrimonio Socimi moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move.

We note that, in three years, revenue has actually grown at a 31% annual rate, so that doesn't seem to be a reason to sell shares. This analysis is just perfunctory, but it might be worth researching Fidere Patrimonio Socimi more closely, as sometimes stocks fall unfairly. This could present an opportunity.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Fidere Patrimonio Socimi's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered Fidere Patrimonio Socimi's share price action, but we should also mention its total shareholder return (TSR). 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. We note that Fidere Patrimonio Socimi's TSR, at -11% is higher than its share price return of -43%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

Pleasingly, Fidere Patrimonio Socimi's total shareholder return last year was 0.7%. That certainly beats the loss of about 3.8% per year over three years. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. 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. For example, we've discovered 1 warning sign for Fidere Patrimonio Socimi that you should be aware of before investing here.

But note: Fidere Patrimonio Socimi may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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