Primero Group Limited (ASX:PGX) shareholders should be happy to see the share price up 15% in the last week. But that doesn't change the fact that the returns over the last year have been less than pleasing. The cold reality is that the stock has dropped 48% in one year, under-performing the market.
See our latest analysis for Primero Group
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. 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.
Unfortunately Primero Group reported an EPS drop of 11% for the last year. This reduction in EPS is not as bad as the 48% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 5.31.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Primero Group has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Primero Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Primero Group shareholders are down 48% for the year, even worse than the market loss of 11%. 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 44%, 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 Primero Group better, we need to consider many other factors. For example, we've discovered 6 warning signs for Primero Group (2 make us uncomfortable!) that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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.
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