While shareholders of Sotera Health (NASDAQ:SHC) are in the red over the last year, underlying earnings have actually grown
Sotera Health Company (NASDAQ:SHC) shareholders are doubtless heartened to see the share price bounce 35% in just one week. But that's not enough to compensate for the decline over the last twelve months. Like an arid lake in a warming world, shareholder value has evaporated, with the share price down 62% in that time. The share price recovery is not so impressive when you consider the fall. It may be that the fall was an overreaction.
While the stock has risen 35% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.
See our latest analysis for Sotera Health
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. 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 unfortunate twelve months during which the Sotera Health share price fell, it actually saw its earnings per share (EPS) improve by 226%. Of course, the situation might betray previous over-optimism about growth.
It's surprising to see the share price fall so much, despite the improved EPS. So it's well worth checking out some other metrics, too.
Sotera Health 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 earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Sotera Health stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
We doubt Sotera Health shareholders are happy with the loss of 62% over twelve months. That falls short of the market, which lost 17%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 53%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Sotera Health better, we need to consider many other factors. For example, we've discovered 3 warning signs for Sotera Health (2 can't be ignored!) that you should be aware of before investing here.
Of course Sotera Health may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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