FIGS' (NYSE:FIGS) investors will be pleased with their 17% return over the last year
We believe investing is smart because history shows that stock markets go higher in the long term. But if you choose that path, you're going to buy some stocks that fall short of the market. For example, the FIGS, Inc. (NYSE:FIGS), share price is up over the last year, but its gain of 17% trails the market return. We'll need to follow FIGS for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for FIGS
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
FIGS went from making a loss to reporting a profit, in the last year.
The company was close to break-even last year, so earnings per share of US$0.085 isn't particularly stand out. We'd argue the positive share price reflects the move to profitability. Some investors scan for companies that have just become profitable, since that's an important business development milestone.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on FIGS' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
FIGS shareholders have gained 17% for the year. Unfortunately this falls short of the market return of around 20%. Shareholders are doubtless excited that the stock price has been doing even better lately, with a gain of 49% in just ninety days. It's worth taking note when returns accelerate, as it can indicate positive change in the underlying business, and winners often keep winning. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for FIGS (of which 1 is a bit concerning!) you should know about.
FIGS is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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
