It's normal to be annoyed when stock you own has a declining share price. But sometimes a share price fall can have more to do with market conditions than the performance of the specific business. So while the The York Water Company (NASDAQ:YORW) share price is down 12% in the last year, the total return to shareholders (which includes dividends) was -10.0%. And that total return actually beats the market decline of 20%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 8.6% in three years. Unfortunately the last month hasn't been any better, with the share price down 12%. However, we note the price may have been impacted by the broader market, which is down 9.0% in the same time period.
With the stock having lost 8.7% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.
Even though the York Water share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.
By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, last year. But looking to other metrics might better explain the share price change.
York Water's revenue is actually up 5.2% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling York Water stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
While it's never nice to take a loss, York Water shareholders can take comfort that , including dividends,their trailing twelve month loss of 10.0% wasn't as bad as the market loss of around 20%. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand York Water better, we need to consider many other factors. For example, we've discovered 3 warning signs for York Water (1 is potentially serious!) 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 US 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.
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