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A Look At Consolidated Water's (NASDAQ:CWCO) Share Price Returns

Simply Wall St
·3 min read

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Consolidated Water Co. Ltd. (NASDAQ:CWCO) share price slid 36% over twelve months. That contrasts poorly with the market return of 21%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 14% in three years. Furthermore, it's down 14% in about a quarter. That's not much fun for holders.

Check out our latest analysis for Consolidated Water

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.

Unhappily, Consolidated Water had to report a 55% decline in EPS over the last year. This fall in the EPS is significantly worse than the 36% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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

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 Consolidated Water's earnings, revenue and cash flow.

A Different Perspective

Investors in Consolidated Water had a tough year, with a total loss of 34% (including dividends), against a market gain of about 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 1.6% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Consolidated Water better, we need to consider many other factors. For instance, we've identified 3 warning signs for Consolidated Water that you should be aware of.

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 US exchanges.

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. 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.

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