The nature of investing is that you win some, and you lose some. Anyone who held Xpediator Plc (LON:XPD) over the last year knows what a loser feels like. The share price has slid 58% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 33% lower than three years ago). The falls have accelerated recently, with the share price down 26% in the last three months.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Xpediator
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately Xpediator reported an EPS drop of 79% for the last year. Readers should not this outcome was influenced by the impact of extraordinary items on EPS. This fall in the EPS is significantly worse than the 58% the share price fall. It may have been that the weak EPS was not as bad as some had feared. With a P/E ratio of 113.10, it's fair to say the market sees an EPS rebound on the cards.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
A Different Perspective
Xpediator shareholders are down 57% for the year (even including dividends), falling short of the market return. Meanwhile, the broader market slid about 6.1%, likely weighing on the stock. The three-year loss of 9% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Xpediator has 4 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
Of course Xpediator may not be the best stock to buy. So you may wish to see this free collection of growth stocks.