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While shareholders of Herbalife Nutrition (NYSE:HLF) are in the red over the last year, underlying earnings have actually grown

Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for Herbalife Nutrition Ltd. (NYSE:HLF) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 56% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 46% in the last three years. Furthermore, it's down 25% in about a quarter. That's not much fun for holders. Of course, this share price action may well have been influenced by the 15% decline in the broader market, throughout the period.

On a more encouraging note the company has added US$124m 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.

See our latest analysis for Herbalife Nutrition

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. 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.

During the unfortunate twelve months during which the Herbalife Nutrition share price fell, it actually saw its earnings per share (EPS) improve by 0.4%. It could be that the share price was previously over-hyped.

It seems quite likely that the market was expecting higher growth from the stock. But looking to other metrics might better explain the share price change.

Revenue was fairly steady year on year, which isn't usually such a bad thing. But the share price might be lower because the market expected a meaningful improvement, and got none.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Herbalife Nutrition stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

We regret to report that Herbalife Nutrition shareholders are down 56% for the year. Unfortunately, that's worse than the broader market decline of 18%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Herbalife Nutrition is showing 2 warning signs in our investment analysis , you should know about...

Herbalife Nutrition is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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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