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Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for Alphawave IP Group plc (LON:AWE) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 64% in that time. We wouldn't rush to judgement on Alphawave IP Group because we don't have a long term history to look at. Even worse, it's down 26% in about a month, which isn't fun at all.
Since Alphawave IP Group has shed US$202m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Check out our latest analysis for Alphawave IP Group
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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).
Unfortunately Alphawave IP Group reported an EPS drop of 34% for the last year. The share price decline of 64% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. Of course, with a P/E ratio of 113.43, the market remains optimistic.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Alphawave IP Group's earnings, revenue and cash flow.
A Different Perspective
We doubt Alphawave IP Group shareholders are happy with the loss of 64% over twelve months. That falls short of the market, which lost 6.1%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 24%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 4 warning signs for Alphawave IP Group you should know about.
Alphawave IP Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.