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While not a mind-blowing move, it is good to see that the Wizz Air Holdings Plc (LON:WIZZ) share price has gained 18% in the last three months. But over the last three years we've seen a quite serious decline. In that time, the share price dropped 66%. So the improvement may be a real relief to some. While many would remain nervous, there could be further gains if the business can put its best foot forward.
On a more encouraging note the company has added UK£150m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.
See our latest analysis for Wizz Air Holdings
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Wizz Air Holdings 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 it's worth looking at other metrics to try to understand the share price move.
We note that, in three years, revenue has actually grown at a 42% annual rate, so that doesn't seem to be a reason to sell shares. This analysis is just perfunctory, but it might be worth researching Wizz Air Holdings more closely, as sometimes stocks fall unfairly. This could present an opportunity.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Wizz Air Holdings stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Investors in Wizz Air Holdings had a tough year, with a total loss of 31%, against a market gain of about 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Wizz Air Holdings better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Wizz Air Holdings .