U.S. markets closed
  • S&P 500

    3,963.51
    +29.59 (+0.75%)
     
  • Dow 30

    33,781.48
    +183.56 (+0.55%)
     
  • Nasdaq

    11,082.00
    +123.45 (+1.13%)
     
  • Russell 2000

    1,818.29
    +11.39 (+0.63%)
     
  • Crude Oil

    72.08
    +0.62 (+0.87%)
     
  • Gold

    1,801.20
    -0.30 (-0.02%)
     
  • Silver

    23.31
    +0.06 (+0.28%)
     
  • EUR/USD

    1.0559
    -0.0001 (-0.01%)
     
  • 10-Yr Bond

    3.4910
    +0.0830 (+2.44%)
     
  • GBP/USD

    1.2233
    -0.0005 (-0.04%)
     
  • USD/JPY

    136.7750
    +0.1450 (+0.11%)
     
  • BTC-USD

    17,239.42
    +386.86 (+2.30%)
     
  • CMC Crypto 200

    405.01
    +10.32 (+2.62%)
     
  • FTSE 100

    7,472.17
    -17.02 (-0.23%)
     
  • Nikkei 225

    27,574.43
    0.00 (0.00%)
     

FD Technologies (LON:FDP) investors are sitting on a loss of 52% if they invested five years ago

Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. To wit, the FD Technologies Plc (LON:FDP) share price managed to fall 53% over five long years. That's not a lot of fun for true believers. And some of the more recent buyers are probably worried, too, with the stock falling 36% in the last year. Shareholders have had an even rougher run lately, with the share price down 33% in the last 90 days.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for FD Technologies

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

Looking back five years, both FD Technologies' share price and EPS declined; the latter at a rate of 9.0% per year. This reduction in EPS is less than the 14% annual reduction in the share price. This implies that the market was previously too optimistic about the stock. Having said that, the market is still optimistic, given the P/E ratio of 62.78.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on FD Technologies' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market lost about 10.0% in the twelve months, FD Technologies shareholders did even worse, losing 36%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for FD Technologies that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here