Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the EuroDry Ltd. (NASDAQ:EDRY) share price is up 10% in the last year, clearly besting than the market return of around 5.5% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! EuroDry hasn't been listed for long, so it's still not clear if it is a long term winner.
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 last year EuroDry 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.
However the year on year revenue growth of 30% would help. Many businesses do go through a faze where they have to forgo some profits to drive business development, and sometimes its for the best.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We know that EuroDry has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think EuroDry will earn in the future (free profit forecasts).
A Different Perspective
EuroDry boasts a total shareholder return of 10% for the last year. And the share price momentum remains respectable, with a gain of 3.9% in the last three months. This suggests the company is continuing to win over new investors. Before deciding if you like the current share price, check how EuroDry scores on these 3 valuation metrics.
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 US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.