Luzerner Kantonalbank (VTX:LUKN) shareholders have endured a 11% loss from investing in th
April 1, 2025
In order to justify the effort of selecting individual stocks, it’s worth striving to beat the returns from a market index fund. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that’s been the case for longer term Luzerner Kantonalbank AG (VTX:LUKN) shareholders, since the share price is down 20% in the last three years, falling well short of the market decline of around 6.2%.
Now let’s have a look at the company’s fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Although the share price is down over three years, Luzerner Kantonalbank actually managed to grow EPS by 3.7% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.
After considering the numbers, we’d posit that the the market had higher expectations of EPS growth, three years back. But it’s possible a look at other metrics will be enlightening.
We note that, in three years, revenue has actually grown at a 4.1% annual rate, so that doesn’t seem to be a reason to sell shares. It’s probably worth investigating Luzerner Kantonalbank further; while we may be missing something on this analysis, there might also be an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling Luzerner Kantonalbank stock, you should check out this FREE detailed report on its balance sheet.
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Luzerner Kantonalbank’s TSR for the last 3 years was -11%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
Luzerner Kantonalbank shareholders are up 2.5% for the year (even including dividends). Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 1.5% per year over five year. It is possible that returns will improve along with the business fundamentals. Importantly, we haven’t analysed Luzerner Kantonalbank’s dividend history. This free visual report on its dividends is a must-read if you’re thinking of buying.
But note: Luzerner Kantonalbank may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Swiss exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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