Yangarra Resources Ltd. (TSE:YGR) shareholders might be concerned after seeing the share price drop 12% in the last month. But that doesn't change the fact that the returns over the last year have been very strong. Like an eagle, the share price soared 141% in that time. So it may be that the share price is simply cooling off after a strong rise. The real question is whether the business is trending in the right direction.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year Yangarra Resources grew its earnings per share (EPS) by 355%. This EPS growth is significantly higher than the 141% increase in the share price. So it seems like the market has cooled on Yangarra Resources, despite the growth. Interesting. The caution is also evident in the lowish P/E ratio of 3.78.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
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. It might be well worthwhile taking a look at our free report on Yangarra Resources' earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that Yangarra Resources shareholders have received a total shareholder return of 141% over one year. Notably the five-year annualised TSR loss of 2% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. To that end, you should be aware of the 2 warning signs we've spotted with Yangarra Resources .
Yangarra Resources 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 CA exchanges.
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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.