As an investor its worth striving to ensure your overall portfolio beats the market average. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term IRIS Corporation Berhad (KLSE:IRIS) shareholders, since the share price is down 39% in the last three years, falling well short of the market decline of around 12%. The more recent news is of little comfort, with the share price down 23% in a year. Unfortunately the share price momentum is still quite negative, with prices down 13% in thirty 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.
Check out our latest analysis for IRIS Corporation Berhad
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).
Although the share price is down over three years, IRIS Corporation Berhad actually managed to grow EPS by 34% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Alternatively, growth expectations may have been unreasonable in the past.
It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.
Revenue is actually up 31% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching IRIS Corporation Berhad more closely, as sometimes stocks fall unfairly. This could present an opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling IRIS Corporation Berhad stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While the broader market gained around 3.8% in the last year, IRIS Corporation Berhad shareholders lost 23%. 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 6% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand IRIS Corporation Berhad better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for IRIS Corporation Berhad you should know about.