Five-year shareholder returns and company earnings continue to slide as JCDecaux (EPA:DEC) stock falls another 3.2% last week

Statistically speaking, long-term investing is a profitable business. But unfortunately, some businesses just don’t succeed. Zoom on an example, the JCDecaux SA (EPA:DEC) The stock price has fallen 60% over the past half-decade. It’s not much fun for true believers. We also note that the stock has performed poorly over the past year, with the stock price falling 42%. The falls have accelerated recently, with the stock price falling 24% in the past three months.

Given that JCDecaux has lost 89 million euros of its value in the last 7 days, let’s see if the longer-term decline was driven by the company’s economics.

Before looking at performance, know that our analysis indicates that The DEC is potentially undervalued!

To paraphrase Benjamin Graham: in the short term, the market is a voting machine, but in the long term, it is a weighing machine. An imperfect but simple way to examine the evolution of a company’s perception by the market is to compare the evolution of earnings per share (EPS) with the evolution of the share price.

In five years of stock market growth, JCDecaux has gone from loss to profitability. Most would consider this a good thing, so it’s counterintuitive to see the stock price go down. Other metrics can better explain the stock price movement.

Arguably, the decline in revenue of 5.9% per year for half a decade suggests that the company cannot grow in the long term. This could explain the weakness in the share price.

The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).

ENXTPA: DEC Earnings and Revenue Growth September 23, 2022

JCDecaux is well known to investors and many savvy analysts have attempted to predict future profit levels. We therefore recommend that you consult this free report showing consensus forecast

A different perspective

We regret to inform you that JCDecaux’s shareholding is down 42% over the year. Unfortunately, this is worse than the general market decline of 11%. That said, it is 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 capped a bad patch, with shareholders facing a total loss of 10% per year over five years. Generally speaking, long-term stock price weakness can be a bad sign, although contrarian investors may want to seek out the stock in hopes of a turnaround. It is always interesting to follow the evolution of the share price over the long term. But to better understand JCDecaux, there are many other factors to consider. For example, we have identified 1 warning sign for JCDecaux of which you should be aware.

Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of companies that we believe will increase their profits.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on UK stock 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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Find out if JCDecaux is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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