The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the last three years have been particularly tough on longer term Lydall, Inc. (NYSE:LDL) shareholders. So they might be feeling emotional about the 59% share price collapse, in that time. And over the last year the share price fell 53%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 8.7% in thirty 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.
During the three years that the share price fell, Lydall's earnings per share (EPS) dropped by 35% each year. In comparison the 26% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Lydall's key metrics by checking this interactive graph of Lydall's earnings, revenue and cash flow.
A Different Perspective
Investors in Lydall had a tough year, with a total loss of 53%, against a market gain of about 0.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8.0% over the last half decade. 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. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
But note: Lydall 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.
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