Investing in Consumer Portfolio Services (NASDAQ:CPSS) three years ago would have delivered you a 174% gain
Consumer Portfolio Services, Inc. (NASDAQ:CPSS) shareholders might be concerned after seeing the share price drop 23% in the last quarter. In contrast, the return over three years has been impressive. Indeed, the share price is up a very strong 174% in that time. So the recent fall in the share price should be viewed in that context. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.
So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.
See our latest analysis for Consumer Portfolio Services
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. 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 three years of share price growth, Consumer Portfolio Services achieved compound earnings per share growth of 66% per year. The average annual share price increase of 40% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time. This cautious sentiment is reflected in its (fairly low) P/E ratio of 2.84.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into Consumer Portfolio Services' key metrics by checking this interactive graph of Consumer Portfolio Services's earnings, revenue and cash flow.
A Different Perspective
While the broader market gained around 15% in the last year, Consumer Portfolio Services shareholders lost 0.9%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 20%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Consumer Portfolio Services is showing 1 warning sign in our investment analysis , you should know about...
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.
