Volatility 101: Should Gardner Denver Holdings (NYSE:GDI) Shares Have Dropped 18%?
While not a mind-blowing move, it is good to see that the Gardner Denver Holdings, Inc. (NYSE:GDI) share price has gained 27% in the last three months. But that is minimal compensation for the share price under-performance over the last year. In fact the stock is down 18% in the last year, well below the market return.
See our latest analysis for Gardner Denver Holdings
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
The last year saw Gardner Denver Holdings’s EPS really take off. We don’t think the growth guide to the sustainable growth rate in this case, but we do think this sort of increase is impressive. As you can imagine, the share price action therefore perturbs us. Some different data might shed some more light on the situation.
Gardner Denver Holdings managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don’t readily explain the share price drop, there might be an opportunity if the market has overreacted.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Gardner Denver Holdings will earn in the future (free profit forecasts)
A Different Perspective
Given that the market gained 3.0% in the last year, Gardner Denver Holdings shareholders might be miffed that they lost 18%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Putting aside the last twelve months, it’s good to see the share price has rebounded by 27%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Before forming an opinion on Gardner Denver Holdings you might want to consider these 3 valuation metrics.
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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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. Thank you for reading.
