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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Gibraltar Industries, Inc. (NASDAQ:ROCK) shareholders over the last year, as the share price declined 33%. That's disappointing when you consider the market declined 2.0%. Longer term investors have fared much better, since the share price is up 31% in three years. Even worse, it's down 21% in about a month, which isn't fun at all. We do note, however, that the broader market is down 12% in that period, and this may have weighed on the share price.
Since Gibraltar Industries has shed US$187m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the unfortunate twelve months during which the Gibraltar Industries share price fell, it actually saw its earnings per share (EPS) improve by 25%. It could be that the share price was previously over-hyped.
It's surprising to see the share price fall so much, despite the improved EPS. So it's easy to justify a look at some other metrics.
In contrast, the 5.0% drop in revenue is a real concern. If the market sees the weak revenue as jeopardising EPS, that could explain the lower share price.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We know that Gibraltar Industries has improved its bottom line lately, but what does the future have in store? So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We regret to report that Gibraltar Industries shareholders are down 33% for the year. Unfortunately, that's worse than the broader market decline of 2.0%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Is Gibraltar Industries cheap compared to other companies? These 3 valuation measures might help you decide.