Investing in stocks comes with the risk that the share price will fall. And unfortunately for Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 66%. We wouldn't rush to judgement on Loma Negra Compañía Industrial Argentina Sociedad Anónima because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 54% in the last 90 days.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the unfortunate twelve months during which the Loma Negra Compañía Industrial Argentina Sociedad Anónima share price fell, it actually saw its earnings per share (EPS) improve by 39%. It's quite possible that growth expectations may have been unreasonable in the past.
It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.
On the other hand, we're certainly perturbed by the 5.5% decline in Loma Negra Compañía Industrial Argentina Sociedad Anónima's revenue. Many investors see falling revenue as a likely precursor to lower earnings, so this could well explain the weak share price.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It is of course excellent to see how Loma Negra Compañía Industrial Argentina Sociedad Anónima has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Loma Negra Compañía Industrial Argentina Sociedad Anónima's financial health with this free report on its balance sheet.
A Different Perspective
We doubt Loma Negra Compañía Industrial Argentina Sociedad Anónima shareholders are happy with the loss of 66% over twelve months. That falls short of the market, which lost 4.6%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 54%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Case in point: We've spotted 3 warning signs for Loma Negra Compañía Industrial Argentina Sociedad Anónima you should be aware of, and 1 of them is a bit concerning.
But note: Loma Negra Compañía Industrial Argentina Sociedad Anónima 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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