While not a mind-blowing move, it is good to see that the Livent Corporation (NYSE:LTHM) share price has gained 23% in the last three months. But that doesn't change the reality of under-performance over the last twelve months. The cold reality is that the stock has dropped 39% in one year, under-performing the market.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Unhappily, Livent had to report a 16% decline in EPS over the last year. This reduction in EPS is not as bad as the 39% share price fall. 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).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
A Different Perspective
While Livent shareholders are down 39% for the year, the market itself is up 31%. 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. Putting aside the last twelve months, it's good to see the share price has rebounded by 23%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). Before deciding if you like the current share price, check how Livent scores on these 3 valuation metrics.
But note: Livent may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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