Cricut's (NASDAQ:CRCT one-year decrease in earnings delivers investors with a 4.9% loss
It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the Cricut, Inc. (NASDAQ:CRCT) share price is down 15% in the last year. That falls noticeably short of the market return of around 16%. We wouldn't rush to judgement on Cricut because we don't have a long term history to look at. In the last ninety days we've seen the share price slide 23%. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
With the stock having lost 5.9% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Check out our latest analysis for Cricut
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately Cricut reported an EPS drop of 15% for the last year. This change in EPS is remarkably close to the 15% decrease in the share price. So it seems that the market sentiment has not changed much, despite the weak results. Instead, the change in the share price seems to reduction in earnings per share, alone.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
What About The Total Shareholder Return (TSR)?
We've already covered Cricut's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Cricut hasn't been paying dividends, but its TSR of -4.9% exceeds its share price return of -15%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
While Cricut shareholders are down 4.9% for the year, the market itself is up 16%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Notably, the loss over the last year isn't as bad as the 23% drop in the last three months. So it seems like some holders have been dumping the stock of late - and that's not bullish. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Cricut has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
We will like Cricut better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.
