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This FTSE 100 share has crashed 42% in a year. Should I buy now?

The FTSE 100 has returned more than 16% over the past 12 months. Yet this FTSE 100 share has collapsed by 42%. Is it now...
Photo by Shubham Dhage

The past 12 months have been pretty good to the FTSE 100 index. Over the past year, the UK’s blue-chip index has gained 12.2%. Adding in dividends of, say, 4% takes the Footsie’s total return to roughly 16.2%. Not bad at all. What’s more, this often unloved and overlooked London market has actually beaten the S&P 500 over 12 months.

As I write, the main US market index has gained 12.6% in 12 months. Adding in much lower dividends of, say, 1.4% raises this return to 14%. Whoever would have imagined this unexpected result? Actually, I’ve been predicting this outcome for some while. Throughout the second half of 2021, I repeatedly argued that US stocks were too expensive and UK shares too cheap. But not all FTSE 100 shares have down well in 2021-22. Here’s one beaten-down stock that has performed terribly over the last 12 months.

FTSE 100 flops

Of the 100 shares in the FTSE 100, 61 have risen in value over the past 12 months. These gains range from a handsome 88.9% to a modest 0.7%. The average rise across all 61 winners is a tidy 21%. At the other end of the scale lie 39 losers. Declines among these losers range from just 0.9% to a gruesome 49.6%. Across all 39 losers, the average loss is 14.6%. (For the record, this well-known FTSE 100 stock is in very last place, having crashed by 49.6% over 12 months. Yikes.)

This stock has imploded

The next-worst performer is Evraz (LSE: EVR) in 99th place. Evraz stock is down a whopping 42.3% in the last 12 months. No doubt about it, this FTSE 100 stock has taken a brutal beating lately. Here’s how it has performed over five time periods: One day: -7% | One month: -44.9% | Six months: -45.2% | One year: -42.3% | Five years: +34.1%. As you can see, though Evraz shares have risen more than a third over five years, they have imploded in recent months. Why? Because this FTSE 100 company is heavily exposed to Russia and its economy.

Evraz is a highly risky stock

One reason why Evraz shares have tanked in 2022 is this global steelmaker and miner has operations in Russia, North America, and Canada. Its main products include steel, iron ore, coal, and vanadium. Founded in Moscow in 1992, the group’s biggest shareholder is billionaire Roman Abramovich (owner of Premier League team Chelsea FC). Hence, with tensions rising between Russia and Ukraine, this FTSE 100 stock has recently seen a wave of risk-off selling.

As I write, Evraz shares trade at 306.7p, down 23p (-7%) today. At this price, Evraz’s market value is below £4.5bn. Right now, this FTSE 100 share trades on a price-to-earnings ratio under four and an earnings yield of 25.2%. Because of the collapse in its share price, Evraz’s dividend yield has exploded to 26.7% — the highest in the FTSE 100 by miles. To me, this cash yield simply isn’t sustainable. Today, I see Evraz is a binary bet. If there is no Russia-Ukraine war, then these shares could soar. But if there is war, then shareholders will be sore. I don’t own this FTSE 100 stock today and I’d buy it only as a speculative punt. I see this highly risky and volatile stock as unsuitable for widows, orphans, and other risk-averse investors!

The post This FTSE 100 share has crashed 42% in a year. Should I buy now? appeared first on The Motley Fool UK.

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.





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