If you love investing in stocks you're bound to buy some losers. But the long term shareholders of Somi Conveyor Beltings Limited (NSE:SOMICONV) have had an unfortunate run in the last three years. Sadly for them, the share price is down 63% in that time. And more recent buyers are having a tough time too, with a drop of 58% in the last year. The falls have accelerated recently, with the share price down 19% in the last three months.
See our latest analysis for Somi Conveyor Beltings
There is no denying that markets are sometimes efficient, but prices do not always reflect 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.
Somi Conveyor Beltings saw its EPS decline at a compound rate of 14% per year, over the last three years. This reduction in EPS is slower than the 28% annual reduction in the share price. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 10.55.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Somi Conveyor Beltings's earnings, revenue and cash flow.
A Different Perspective
The last twelve months weren't great for Somi Conveyor Beltings shares, which performed worse than the market, costing holders 58%. Meanwhile, the broader market slid about 1.9%, likely weighing on the stock. Shareholders have lost 28% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Is Somi Conveyor Beltings cheap compared to other companies? These 3 valuation measures might help you decide.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
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