The Jensen-Group (EBR:JEN) Share Price Is Down 42% So Some Shareholders Are Getting Worried

·3 min read

Investors can earn very close to the average market return by buying an index fund. But in any given year a good portion of stocks will fall short of that. Unfortunately, that's been the case for longer term Jensen-Group NV (EBR:JEN) shareholders, since the share price is down 42% in the last three years, less than the market return of around -36%. And the ride hasn't got any smoother in recent times over the last year, with the price 29% lower in that time. Even worse, it's down 27% in about a month, which isn't fun at all. We do note, however, that the broader market is down 32% in that period, and this may have weighed on the share price.

View our latest analysis for Jensen-Group

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Jensen-Group's earnings per share (EPS) dropped by 3.1% each year. The share price decline of 16% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 11.93.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

ENXTBR:JEN Past and Future Earnings, March 15th 2020
ENXTBR:JEN Past and Future Earnings, March 15th 2020

It might be well worthwhile taking a look at our free report on Jensen-Group's earnings, revenue and cash flow.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Jensen-Group the TSR over the last 3 years was -39%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

The total return of 28% received by Jensen-Group shareholders over the last year isn't far from the market return of -27%. The silver lining is that longer term investors would have made a total return of 4.8% per year over half a decade. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. 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 Jensen-Group that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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