Did Changing Sentiment Drive Badger Daylighting's (TSE:BAD) Share Price Down By 42%?
Badger Daylighting Ltd. (TSE:BAD) shareholders should be happy to see the share price up 20% in the last month. But in truth the last year hasn't been good for the share price. After all, the share price is down 42% in the last year, significantly under-performing the market.
View our latest analysis for Badger Daylighting
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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 Badger Daylighting reported an EPS drop of 8.8% for the last year. This reduction in EPS is not as bad as the 42% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Dive deeper into the earnings by checking this interactive graph of Badger Daylighting's earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Badger Daylighting's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Badger Daylighting's TSR, which was a 41% drop over the last year, was not as bad as the share price return.
A Different Perspective
While the broader market lost about 15% in the twelve months, Badger Daylighting shareholders did even worse, losing 41% (even including dividends) . Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.1% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Badger Daylighting better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Badger Daylighting you should know about.
Badger Daylighting is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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.
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. Thank you for reading.
