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Did Changing Sentiment Drive Alimera Sciences's (NASDAQ:ALIM) Share Price Down A Painful 85%?

Simply Wall St

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Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We don't wish catastrophic capital loss on anyone. Anyone who held Alimera Sciences, Inc. (NASDAQ:ALIM) for five years would be nursing their metaphorical wounds since the share price dropped 85% in that time. Shareholders have had an even rougher run lately, with the share price down 12% in the last 90 days.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Check out our latest analysis for Alimera Sciences

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

During five years of share price growth, Alimera Sciences moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

Revenue is actually up 33% over the time period. So it seems one might have to take closer look at the fundamentals to understand why the share price languishes. After all, there may be an opportunity.

Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.

NasdaqGM:ALIM Income Statement, June 20th 2019

We know that Alimera Sciences has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Alimera Sciences's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Alimera Sciences has rewarded shareholders with a total shareholder return of 5.9% in the last twelve months. Notably the five-year annualised TSR loss of 31% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. You could get a better understanding of Alimera Sciences's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.