Investors in WildBrain (TSE:WILD) from a year ago are still down 57%, even after 12% gain this past week
WildBrain Ltd. (TSE:WILD) shareholders should be happy to see the share price up 12% in the last week. But that doesn't change the fact that the returns over the last year have been disappointing. Specifically, the stock price slipped by 57% in that time. It's not that amazing to see a bounce after a drop like that. Arguably, the fall was overdone.
On a more encouraging note the company has added CA$27m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.
See our latest analysis for WildBrain
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year WildBrain saw its earnings per share drop below zero. While this may prove temporary, we'd consider it a negative, so it doesn't surprise us that the stock price is down. Of course, if the company can turn the situation around, investors will likely profit.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that WildBrain has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at WildBrain's financial health with this free report on its balance sheet.
A Different Perspective
Investors in WildBrain had a tough year, with a total loss of 57%, against a market gain of about 7.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 1 warning sign for WildBrain that you should be aware of before investing here.
Of course WildBrain may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Canadian 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.
