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Even though Dixie Group (NASDAQ:DXYN) has lost US$11m market cap in last 7 days, shareholders are still up 434% over 3 years

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The Dixie Group, Inc. (NASDAQ:DXYN) shareholders have seen the share price descend 15% over the month. But over the last three years the stock has shone bright like a diamond. In fact, the share price has taken off in that time, up 434%. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. The share price action could signify that the business itself is dramatically improved, in that time.

Since the long term performance has been good but there's been a recent pullback of 13%, let's check if the fundamentals match the share price.

See our latest analysis for Dixie Group

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

Dixie Group became profitable within the last three years. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth
earnings-per-share-growth

Dive deeper into Dixie Group's key metrics by checking this interactive graph of Dixie Group's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Dixie Group has rewarded shareholders with a total shareholder return of 40% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Dixie Group better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Dixie Group (of which 1 is significant!) you should know about.

But note: Dixie Group 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.