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One simple way to benefit from a rising market is to buy an index fund. By comparison, an individual stock is unlikely to match market returns - and could well fall short. For example, that's what happened with Accel Entertainment, Inc. (NYSE:ACEL) over the last year - it's share price is down 18% versus a market decline of 17%. We wouldn't rush to judgement on Accel Entertainment because we don't have a long term history to look at. It's down 22% in about a month. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
View our latest analysis for Accel Entertainment
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 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.
Even though the Accel Entertainment share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.
It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.
Accel Entertainment 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.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Accel Entertainment has grown profits over the years, but the future is more important for shareholders. This free interactive report on Accel Entertainment's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Accel Entertainment shareholders are down 18% over twelve months. That's reasonably close to the the market return of -17%. Unfortunately, last year's performance may indicate unresolved challenges, and the share price has continued to drop, down 15% over the last three months. Most people would be understandably disheartened by this sort of performance, given the lack of a long term history. 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. For instance, we've identified 1 warning sign for Accel Entertainment that you should be aware of.