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Simonds Group Limited (ASX:SIO) shareholders should be happy to see the share price up 12% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 12% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.
View our latest analysis for Simonds Group
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.
Simonds Group became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. So given the share price is down it's worth checking some other metrics too.
With revenue flat over three years, it seems unlikely that the share price is reflecting the top line. There doesn't seem to be any clear correlation between the fundamental business metrics and the share price. That could mean that the stock was previously overrated, or it could spell opportunity now.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on Simonds Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
The last twelve months weren't great for Simonds Group shares, which cost holders 11%, while the market was up about 13%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 4.1% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Simonds Group by clicking this link.
Simonds Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.