Natural Alternatives International (NASDAQ:NAII) investors are sitting on a loss of 43% if they invested a year ago
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 Natural Alternatives International, Inc. (NASDAQ:NAII) share price is down 43% in the last year. That's well below the market decline of 12%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 0.9% in three years.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
View our latest analysis for Natural Alternatives International
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).
Even though the Natural Alternatives International share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.
The divergence between the EPS and the share price is quite notable, during the year. So it's easy to justify a look at some other metrics.
On the other hand, we're certainly perturbed by the 3.8% decline in Natural Alternatives International's revenue. Many investors see falling revenue as a likely precursor to lower earnings, so this could well explain the weak share price.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Natural Alternatives International stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We regret to report that Natural Alternatives International shareholders are down 43% for the year. Unfortunately, that's worse than the broader market decline of 12%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 0.4% 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 Natural Alternatives International better, we need to consider many other factors. For instance, we've identified 2 warning signs for Natural Alternatives International (1 makes us a bit uncomfortable) that you should be aware of.
Of course Natural Alternatives International 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 US 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.
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