A Duo of Underperforming Holdings to Ease Up On

They have fallen behind in recent years compared to the market

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Mar 12, 2020
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Even taking into account the short-term overall market declines over fears of the new coronavirus, some companies have underperformed in the long-term and likely would have declined even without the help of a bear market.

Thus, shareholders should consider reducing their holdings in Sumitomo Dainippon Pharma Co Ltd (

DNPUF, Financial) and Fevertree Drinks PLC (FQVTF, Financial). First of all, these companies have underperformed the S&P 500 significantly over the past year, two years and three years.  Second, their dividend yield is below the market average. The benchmark grants 2.12% as of March 11. Third, sell-side analysts on Wall Street have issued negative recommendation ratings for both stocks.

Sumitomo Dainippon Pharma Co Ltd

Shares of the Japanese manufacturer and seller of pharmaceuticals, veterinary medicines and food ingredients have fallen 43.5% in the past year, 2% over the past two years and 10.8% over the past three years through March 11. The stock has underperformed the U.S. market by 42%, 1.2%, and 27%, respectively.

Currently, Sumitomo Dainippon pays a semi-annual dividend of 14.000 Japanese yen ($0.134) per common share, generating a dividend yield of 2.07% as of March 11.

Following a sharp 43% fall over the last 12 months, the share price ($14.8 as of March 11) retracted to the levels we last saw in the first quarter of 2018.

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The market capitalization is around $5.57 billion, the price-earnings ratio is 11.35 and the price-sales ratio is 1.27.

Fevertree Drinks

Shares of the British supplier of mixer drinks in the United Kingdom and internationally fell by 60.7% in the past year, 62.2% in the past two years and 18% in the past three years through March 11, underperforming the U.S. market by 59.2%, 60.5% and 33.8%, respectively.

In 2019, the company paid two semi-annual dividends of 0.155  British pounds ($0.20) per common share. It generates a 1.39% dividend yield as of March 11.

The share price has retracted to the levels that were recorded early in the year of 2017 and trade at $13.92 as of March 11.

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The market capitalization is approximately $1.73 billion, the price-earnings ratio is 19.41 and the price-sales ratio is 5.21.

Disclosure: I have no positions in any securities mentioned.

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