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Investors Who Bought Metro Performance Glass (NZSE:MPG) Shares Three Years Ago Are Now Down 68%

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But long term Metro Performance Glass Limited (NZSE:MPG) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 68% decline in the share price in that time. And more recent buyers are having a tough time too, with a drop of 34% in the last year. In contrast, the stock price has popped 8.3% in the last thirty days.

Check out our latest analysis for Metro Performance Glass

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.

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Metro Performance Glass saw its EPS decline at a compound rate of 13% per year, over the last three years. This reduction in EPS is slower than the 32% annual reduction in the share price. 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 7.11.

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

NZSE:MPG Past and Future Earnings, March 13th 2019
NZSE:MPG Past and Future Earnings, March 13th 2019

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

A Dividend Lost

It’s important to keep in mind that we’ve been talking about the share price returns, which don’t include dividends, while the total shareholder return does. By accounting for the value of dividends paid, the TSR can be seen as a more complete measure of the value a company brings to its shareholders. Over the last 3 years, Metro Performance Glass generated a TSR of -62%, which is, of course, better than the share price return. Even though the company isn’t paying dividends at the moment, it has done in the past.

A Different Perspective

Over the last year, Metro Performance Glass shareholders took a loss of 31%. In contrast the market gained about 9.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 27% per year isn’t as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. Before forming an opinion on Metro Performance Glass you might want to consider these 3 valuation metrics.

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 NZ exchanges.

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.

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. Thank you for reading.