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If you love investing in stocks you're bound to buy some losers. But the last three years have been particularly tough on longer term Eagle Bulk Shipping Inc. (NASDAQ:EGLE) shareholders. Unfortunately, they have held through a 52% decline in the share price in that time. Even worse, it's down 11% in about a month, which isn't fun at all.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Eagle Bulk Shipping became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move.
We note that, in three years, revenue has actually grown at a 41% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worht worth investigating Eagle Bulk Shipping further; while we may be missing something on this analysis, there might also be an opportunity.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
It is of course excellent to see how Eagle Bulk Shipping has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Eagle Bulk Shipping stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Over the last year, Eagle Bulk Shipping shareholders took a loss of 15%. In contrast the market gained about 2.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, the longer term story isn't pretty, with investment losses running at 22% per year over three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. Before spending more time on Eagle Bulk Shipping it might be wise to click here to see if insiders have been buying or selling shares.
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.
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 email@example.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. Thank you for reading.