In This Article:
If you love investing in stocks you're bound to buy some losers. But long term Conduent Incorporated (NASDAQ:CNDT) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 63% decline in the share price in that time. And over the last year the share price fell 33%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 50% in the last 90 days.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Conduent became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.
We think that the revenue decline over three years, at a rate of 5.7% per year, probably had some shareholders looking to sell. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that Conduent 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
While the broader market gained around 7.4% in the last year, Conduent shareholders lost 33%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 1.6% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Conduent better, we need to consider many other factors. Even so, be aware that Conduent is showing 2 warning signs in our investment analysis , you should know about...