Cricut (NASDAQ:CRCT) stock falls 7.1% in past week as one-year earnings and shareholder returns continue downward trend
Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Cricut, Inc. (NASDAQ:CRCT) have suffered share price declines over the last year. To wit the share price is down 51% in that time. Cricut hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it's down 34% in about a quarter. That's not much fun for holders.
If the past week is anything to go by, investor sentiment for Cricut isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
View our latest analysis for Cricut
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.
Unfortunately Cricut reported an EPS drop of 9.4% for the last year. The share price decline of 51% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Cricut has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
We doubt Cricut shareholders are happy with the loss of 51% over twelve months. That falls short of the market, which lost 5.1%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 34% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Cricut (1 is a bit unpleasant) that you should be aware of.
If you are like me, then you will not want to miss this free 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 US 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.
