In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term Danieli & C. Officine Meccaniche S.p.A. (BIT:DAN) shareholders for doubting their decision to hold, with the stock down 21% over a half decade. Unhappily, the share price slid 1.1% in the last week.

See our latest analysis for Danieli & C. Officine Meccaniche

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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, Danieli & C. Officine Meccaniche's earnings per share (EPS) dropped by 15% each year. The share price decline of 4.5% per year isn't as bad as the EPS decline. So the market may previously have expected a drop, or else it expects the situation will improve.

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

We know that Danieli & C. Officine Meccaniche has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Danieli & C. Officine Meccaniche will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Danieli & C. Officine Meccaniche the TSR over the last 5 years was -18%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Danieli & C. Officine Meccaniche provided a TSR of 2.7% over the last twelve months. Unfortunately this falls short of the market return. But at least that's still a gain! Over five years the TSR has been a reduction of 3.9% per year, over five years. So this might be a sign the business has turned its fortunes around. Before forming an opinion on Danieli & C. Officine Meccaniche you might want to consider these 3 valuation metrics.

Of course Danieli & C. Officine Meccaniche may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.