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As Petco Health and Wellness Company (NASDAQ:WOOF) rallies 13% this past week, investors may now be noticing the company's one-year earnings growth

Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) shareholders should be happy to see the share price up 13% in the last week. But in truth the last year hasn't been good for the share price. In fact, the price has declined 39% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added US$348m 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.

View our latest analysis for Petco Health and Wellness Company

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 unfortunate twelve months during which the Petco Health and Wellness Company share price fell, it actually saw its earnings per share (EPS) improve by 35%. It could be that the share price was previously over-hyped.

It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.

Petco Health and Wellness Company managed to grow revenue over the last year, which is usually a real positive. 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).

earnings-and-revenue-growth
earnings-and-revenue-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. You can see what analysts are predicting for Petco Health and Wellness Company in this interactive graph of future profit estimates.

A Different Perspective

Petco Health and Wellness Company shareholders are down 39% for the year, even worse than the market loss of 14%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 23% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Petco Health and Wellness Company better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Petco Health and Wellness Company 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.

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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