March 29, 2024

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Introducing Pittler Maschinenfabrik (FRA:PIT), The Stock That Dropped 48% In The Last Five Years

Pittler Maschinenfabrik AG (FRA:PIT) shareholders should be happy to see the share price up 23% in the last month. But that doesn’t change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 48%, which falls well short of the return you could get by buying an index fund.

See our latest analysis for Pittler Maschinenfabrik

Given that Pittler Maschinenfabrik didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last half decade, Pittler Maschinenfabrik saw its revenue increase by 8.5% per year. That’s a pretty good rate for a long time period. Shareholders have seen the share price fall at 12% per year, for five years: a poor performance. Those who bought back then clearly believed in stronger growth – and maybe even profits. There is always a big risk of losing money yourself when you buy shares in a company that loses money.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

DB:PIT Income Statement May 10th 2020

Take a more thorough look at Pittler Maschinenfabrik’s financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We’d be remiss not to mention the difference between Pittler Maschinenfabrik’s total shareholder return (TSR) and its share price return. 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 Pittler Maschinenfabrik’s TSR, at -44% is higher than its share price return of -48%. 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

We regret to report that Pittler Maschinenfabrik shareholders are down 29% for the year. Unfortunately, that’s worse than the broader market decline of 6.3%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should learn about the 3 warning signs we’ve spotted with Pittler Maschinenfabrik (including 2 which is are potentially serious) .

Of course Pittler Maschinenfabrik 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 DE 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.

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