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Shareholders in Stadler Rail (VTX:SRAIL) are in the red if they invested three years ago

Stadler Rail AG (VTX:SRAIL) shareholders should be happy to see the share price up 10% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 27% in the last three years, significantly under-performing the market.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Stadler Rail

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Stadler Rail saw its EPS decline at a compound rate of 7.6% per year, over the last three years. The share price decline of 10% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Stadler Rail the TSR over the last 3 years was -21%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Stadler Rail shareholders are down 15% over twelve months (even including dividends), which isn't far from the market return of -14%. Over three years shareholders have low 7% per year. This suggests the company might have some problems, not least because the last year saw an even steeper fall. People who buy falling stocks like to quote Baron Rothschild who said to "buy when there's blood in the streets, even if the blood is your own." But Baron Rothschild also said to buy quality. It's always interesting to track share price performance over the longer term. But to understand Stadler Rail better, we need to consider many other factors. For example, we've discovered 3 warning signs for Stadler Rail 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 CH exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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