Advertisement
U.S. markets close in 4 hours 5 minutes
  • S&P 500

    5,254.66
    +6.17 (+0.12%)
     
  • Dow 30

    39,780.67
    +20.59 (+0.05%)
     
  • Nasdaq

    16,404.68
    +5.15 (+0.03%)
     
  • Russell 2000

    2,131.71
    +17.36 (+0.82%)
     
  • Crude Oil

    82.68
    +1.33 (+1.63%)
     
  • Gold

    2,234.50
    +21.80 (+0.99%)
     
  • Silver

    24.92
    +0.17 (+0.70%)
     
  • EUR/USD

    1.0803
    -0.0027 (-0.25%)
     
  • 10-Yr Bond

    4.1870
    -0.0090 (-0.21%)
     
  • GBP/USD

    1.2628
    -0.0010 (-0.08%)
     
  • USD/JPY

    151.3250
    +0.0790 (+0.05%)
     
  • Bitcoin USD

    71,373.52
    +2,396.14 (+3.47%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,963.91
    +31.93 (+0.40%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Investors in Eckoh (LON:ECK) have unfortunately lost 42% over the last year

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the Eckoh plc (LON:ECK) share price is down 43% in the last year. That's disappointing when you consider the market returned 6.5%. Longer term investors have fared much better, since the share price is up 5.3% in three years. The falls have accelerated recently, with the share price down 25% in the last three months.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

Check out our latest analysis for Eckoh

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Unhappily, Eckoh had to report a 15% decline in EPS over the last year. This reduction in EPS is not as bad as the 43% share price fall. So it seems the market was too confident about the business, a year ago.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Eckoh's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 6.5% in the last year, Eckoh shareholders lost 42% (even including dividends). 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. On the bright side, long term shareholders have made money, with a gain of 1.5% per year over half a decade. 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. It's always interesting to track share price performance over the longer term. But to understand Eckoh better, we need to consider many other factors. For example, we've discovered 2 warning signs for Eckoh that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Advertisement