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The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the Escalade, Incorporated (NASDAQ:ESCA) share price is down 48% in the last year. That falls noticeably short of the market decline of around 9.3%. The silver lining (for longer term investors) is that the stock is still 21% higher than it was three years ago. More recently, the share price has dropped a further 8.7% in 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.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Escalade
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
Unfortunately Escalade reported an EPS drop of 17% for the last year. The share price decline of 48% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. The less favorable sentiment is reflected in its current P/E ratio of 7.09.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
This free interactive report on Escalade's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
We regret to report that Escalade shareholders are down 46% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 9.3%. 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. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. 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. It's always interesting to track share price performance over the longer term. But to understand Escalade better, we need to consider many other factors. Take risks, for example - Escalade has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.