The Hain Celestial Group, Inc. (NASDAQ:HAIN) shareholders will doubtless be very grateful to see the share price up 38% in the last month. But don’t envy holders — looking back over 5 years the returns have been really bad. The share price has failed to impress anyone , down a sizable 53% during that time. So we’re not so sure if the recent bounce should be celebrated. But it could be that the fall was overdone.
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 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.
In the last half decade Hain Celestial Group saw its share price fall as its EPS declined below zero. The recent extraordinary items contributed to this situation. At present it’s hard to make valid comparisons between EPS and the share price. However, we can say we’d expect to see a falling share price in this scenario.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
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 Hain Celestial Group’s earnings, revenue and cash flow.
A Different Perspective
Investors in Hain Celestial Group had a tough year, with a total loss of 39%, against a market gain of about 1.4%. 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 14% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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.
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