U.S. markets open in 4 hours 3 minutes
  • S&P Futures

    4,256.25
    -30.25 (-0.71%)
     
  • Dow Futures

    33,803.00
    -178.00 (-0.52%)
     
  • Nasdaq Futures

    13,406.00
    -117.25 (-0.87%)
     
  • Russell 2000 Futures

    1,984.70
    -17.00 (-0.85%)
     
  • Crude Oil

    89.63
    -0.87 (-0.96%)
     
  • Gold

    1,766.50
    -4.70 (-0.27%)
     
  • Silver

    19.11
    -0.35 (-1.79%)
     
  • EUR/USD

    1.0084
    -0.0008 (-0.08%)
     
  • 10-Yr Bond

    2.8800
    0.0000 (0.00%)
     
  • Vix

    20.63
    +0.73 (+3.67%)
     
  • GBP/USD

    1.1871
    -0.0061 (-0.52%)
     
  • USD/JPY

    136.5180
    +0.6560 (+0.48%)
     
  • BTC-USD

    21,723.07
    -1,731.55 (-7.38%)
     
  • CMC Crypto 200

    516.06
    -41.67 (-7.47%)
     
  • FTSE 100

    7,525.97
    -15.88 (-0.21%)
     
  • Nikkei 225

    28,930.33
    -11.81 (-0.04%)
     

Proto Labs (NYSE:PRLB) investors are sitting on a loss of 56% if they invested three years ago

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Proto Labs, Inc. (NYSE:PRLB) shareholders know that all too well, since the share price is down considerably over three years. Regrettably, they have had to cope with a 56% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 46% in the last year.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Proto Labs

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

During the three years that the share price fell, Proto Labs' earnings per share (EPS) dropped by 23% each year. This fall in EPS isn't far from the rate of share price decline, which was 24% per year. So it seems like sentiment towards the stock hasn't changed all that much over time. Rather, the share price has approximately tracked EPS growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

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

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

We regret to report that Proto Labs shareholders are down 46% for the year. Unfortunately, that's worse than the broader market decline of 16%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% 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. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here