boohoo group (LON:BOO) earnings and shareholder returns trended lower last year, but stock rose 5.6% last week
The nature of investing is that you gain some and you lose some. And there’s no doubt that boohoo group plc (LON:BOO) The stock has had a very bad year. During this relatively short period, the stock price fell by 69%. Notably, shareholders have also struggled longer term, with a 43% drop over the past three years. Moreover, it fell by 43% in about a quarter. It’s not much fun for the holders.
Although last week was more reassuring for shareholders, they are still in the red over the past year, so let’s see if the underlying activity was responsible for the decline.
See our latest analysis for boohoo group
While markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just underlying trading performance. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
Unfortunately, boohoo group had to report a 29% decline in EPS over the past year. This reduction in EPS is not as severe as the 69% drop in the share price. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious on the stock.
The graph below illustrates the evolution of EPS over time (reveal the exact values by clicking on the image).
We appreciate that insiders have been buying stocks over the past twelve months. That said, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a careful review of historical growth trends, available here.
A different perspective
boohoo group investors had a difficult year, with a total loss of 69%, against a market gain of around 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance capped a bad run, with shareholders facing a total loss of 4% 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 boohoo group, we need to consider many other factors. Take risks, for example – boohoo group a 3 warning signs (and 1 that shouldn’t be ignored) that we think you should know about.
If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
Please note that the market returns quoted in this article reflect the market-weighted average returns of the shares currently trading on UK stock exchanges.
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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.