The truth is that if you invest for long enough, you're going to end up with some losing stocks. Long term EZCORP, Inc. (NASDAQ:EZPW) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 56% in that time. And over the last year the share price fell 42%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 34% in the last 90 days.
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.
EZCORP became profitable within the last five years. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.
We note that, in three years, revenue has actually grown at a 5.6% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating EZCORP further; while we may be missing something on this analysis, there might also be an opportunity.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We know that EZCORP has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling EZCORP stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Investors in EZCORP had a tough year, with a total loss of 42%, against a market gain of about 16%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 14% over the last half decade. We realise that Buffett 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 businesses. Is EZCORP cheap compared to other companies? These 3 valuation measures might help you decide.
Of course EZCORP may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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 email@example.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.
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