Those who invested in Faurecia (EPA:EO) three years ago are up 28%

Buying a low-cost index fund will get you the average return of the market. But overall, many stocks are underperforming the market. Unfortunately for shareholders, while the Faurecia SE (EPA:EO) The stock price has risen 21% over the past three years, which is below market performance. Zooming in, the stock is up a respectable 6.2% over the past year.

So let’s assess the underlying fundamentals over the past 3 years and see if they have moved in step with shareholder returns.

Discover our latest analysis for Faurecia

While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.

Faurecia has become profitable over the past three years. We therefore expect a rise in the share price over the period.

You can see how EPS has changed over time in the image below (click on the graph to see the exact values).

ENXTPA: EO Earnings per share growth January 18, 2022

We know that Faurecia has recently improved its results, but will it increase its revenues? If you are interested, you can check this free report showing consensus revenue forecast.

What about dividends?

It is important to consider the total shareholder return, as well as the stock price return, for a given stock. The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, based on the assumption that dividends are reinvested. It can be said that the TSR gives a more complete picture of the return generated by a stock. In this case, Faurecia’s TSR over the last 3 years was 28%, which exceeds the share price return mentioned above. And there’s no price guessing that dividend payouts largely explain the divergence!

A different perspective

Faurecia shareholders obtained a total return of 8.5% during the year. Unfortunately, this does not match the market return. On the bright side, it’s still a gain, and it’s actually better than the 4% average return over half a decade. This could indicate that the company is gaining new investors, as it pursues its strategy. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we found 3 warning signs for Faurecia which you should be aware of before investing here.

For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on UK exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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