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Imagine Owning Delphi Technologies (NYSE:DLPH) And Wondering If The 24% Share Price Slide Is Justified

Simply Wall St

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 Delphi Technologies PLC (NYSE:DLPH) shareholders over the last year, as the share price declined 24%. That contrasts poorly with the market return of 14%. We wouldn't rush to judgement on Delphi Technologies because we don't have a long term history to look at. On the other hand the share price has bounced 5.2% over the last week.

Check out our latest analysis for Delphi 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. 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.

Unfortunately Delphi Technologies reported an EPS drop of 31% for the last year. The share price fall of 24% isn't as bad as the reduction in earnings per share. It may have been that the weak EPS was not as bad as some had feared.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

NYSE:DLPH Past and Future Earnings, December 3rd 2019

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. It might be well worthwhile taking a look at our free report on Delphi Technologies's earnings, revenue and cash flow.

A Different Perspective

Given that the market gained 14% in the last year, Delphi Technologies shareholders might be miffed that they lost 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 2.4%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.