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Further weakness as Century Casinos (NASDAQ:CNTY) drops 11% this week, taking one-year losses to 45%

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Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Century Casinos, Inc. (NASDAQ:CNTY) shareholders over the last year, as the share price declined 45%. That contrasts poorly with the market decline of 20%. However, the longer term returns haven't been so bad, with the stock down 25% in the last three years. Shareholders have had an even rougher run lately, with the share price down 45% in the last 90 days. Of course, this share price action may well have been influenced by the 19% decline in the broader market, throughout the period.

Since Century Casinos has shed US$27m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Century Casinos

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 last year Century Casinos grew its earnings per share, moving from a loss to a profit.

When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action. So it makes sense to check out some other factors.

Century Casinos' revenue is actually up 45% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

We know that Century Casinos 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 Century Casinos stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market lost about 20% in the twelve months, Century Casinos shareholders did even worse, losing 45%. 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. On the bright side, long term shareholders have made money, with a gain of 0.2% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Century Casinos better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Century Casinos (including 1 which makes us a bit uncomfortable) .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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.