Volatility 101: Should Commvault Systems (NASDAQ:CVLT) Shares Have Dropped 42%?
Commvault Systems, Inc. (NASDAQ:CVLT) shareholders should be happy to see the share price up 11% in the last week. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 42% in a year, falling short of the returns you could get by investing in an index fund.
Check out our latest analysis for Commvault Systems
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.
Commvault Systems fell to a loss making position during the year. Buyers no doubt think it's a temporary situation, but those with a nose for quality have low tolerance for losses. We hope for shareholders' sake that the company becomes profitable again soon.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into Commvault Systems's key metrics by checking this interactive graph of Commvault Systems's earnings, revenue and cash flow.
A Different Perspective
We regret to report that Commvault Systems shareholders are down 42% for the year. Unfortunately, that's worse than the broader market decline of 11%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2.7% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Commvault Systems is showing 1 warning sign in our investment analysis , you should know about...
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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