In general, long-term investments are preferable. But, unfortunately, some companies simply do not succeed. In other words, Sasol Co., Ltd. (JSE:SOL)'s share price managed to fall 69% over five years. This is very suboptimal, to say the least. And some recent buyers are probably worried, given the share price has fallen 39% in the last year. The decline has accelerated recently, with shares down 21% in the past three months.
Shareholders are down over the long term, so let's take a look at the underlying fundamentals over that time period to see if that's in line with the returns.
Check out our latest analysis for Sasol.
Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are dynamic systems that overreact and that investors are not always rational. One way he looks at how market sentiment has changed over time is to look at the interaction between a company's stock price and his earnings per share (EPS).
During five years of share price growth, Sasol went from a loss to a profit. This is generally considered a positive, so we're surprised by the drop in the share price. Other indicators may better explain the stock price movement.
A stable dividend doesn't really explain why the stock price is falling. It's not immediately clear why the stock is falling, but further research may provide some answers.
You can see below how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We like to see that insiders have made significant purchases in the last year. Even so, future profits will be far more important than whether current shareholders make money.So I recommend checking this free Report showing consensus predictions
What will happen to the dividend?
It's important to consider not only the share price return, but also the total shareholder return for a particular stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often much higher than the share price return. Coincidentally, Sasol's TSR over the past five years was -64%, which is better than the share price return mentioned above. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
Investors in Sasol have had a tough year, with a total loss of 36% (including dividends) compared to a market return of around 3.4%. Even blue-chip stocks can see their share prices drop from time to time, and we like to see improvement in a company's fundamental metrics before we get too interested. Unfortunately, last year's performance ended on a down note, with shareholders facing a total annual loss of 10% over five years. Generally speaking, long-term stock price weakness can be a bad sign, but contrarian investors may want to research the stock in hopes of a turnaround. I think it's very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. To do so, you need to know the following: 4 warning signs Found it at Sasol.
There are plenty of other companies where insiders are buying up shares.I think that's probably the case. do not have I want to miss this free A list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South African exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and the articles are not intended as financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
