To justify the effort of picking individual stocks, it is worth trying to outperform the returns of a market index fund. However, the risk with stock picking is that you are likely to buy companies that underperform. Unfortunately, this has been the case for some time. Ashstrom Group Ltd. (TLV:ASHG) shareholders as the share price has fallen 33% over the past three years, well below the market decline of around 1.2%. Most recently, the share price has fallen another 12% in one month.

After a loss of 4.5% last week, it is worth examining the company’s fundamentals to see what conclusions we can draw from its performance so far.

Check out our latest analysis for Ashstrom Group

To paraphrase Benjamin Graham, in the short term, the market is a voting machine, but in the long term, it is a weighing machine. A flawed but reasonable way to assess how sentiment toward a company has changed is to compare earnings per share (EPS) to the stock price.

Over the three years that the share price fell, Ashtrom Group’s earnings per share (EPS) fell significantly, falling into loss territory. This was partly due to exceptional items impacting earnings. Since the company fell into loss territory, it is difficult to compare the change in EPS with the change in the share price. However, it is safe to say that we would generally expect a lower share price as a result!

The following graph shows how EPS has changed over time (the exact values ​​can be viewed by clicking on the image).

Dive deeper into Ashtrom Group’s key metrics by checking out this interactive graph of Ashtrom Group earnings, revenue and cash flow.

What about the total shareholder return (TSR)?

Investors should note that there is a difference between Ashtrom Group’s total return (TSR) and the change in the share price, which we covered above. The TSR is arguably a more complete return calculation because it takes into account the value of dividends (as if they had been reinvested) as well as the hypothetical value of any discounted capital offered to shareholders. Ashtrom Group’s TSR was a loss of 27% over the three years. This was not as bad as the share price return because dividends were paid.

A different perspective

It’s been a rough year for investors in Ashtrom Group, suffering a total loss of 15% while the market gained about 3.5%. But remember that even the best stocks sometimes underperform the market over a twelve-month period. On the positive side, long-term shareholders have made money, generating a gain of 9% per year over half a decade. The recent sell-off could be an opportunity, so it might be worth checking the fundamentals for signs of a long-term growth trend. While it’s worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, consider the ever-present specter of investment risk. We have identified 2 warning signs with Ashtrom Group (at least 1 that should not be ignored), and understanding them should be part of your investment process.

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

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.