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Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. We wouldn't blame Western Resources Corp. (TSE:WRX) shareholders if they were still in shock after the stock dropped like a lead balloon, down 71% in just one year. A loss like this is a stark reminder that portfolio diversification is important. Because Western Resources hasn't been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 56% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
View our latest analysis for Western Resources
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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.
During the last year Western Resources grew its earnings per share, moving from a loss to a profit. We're surprised that the share price is lower given that improvement. If the company can sustain the earnings growth, this might be an inflection point for the business, which would make right now a really interesting time to study it more closely.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
It might be well worthwhile taking a look at our free report on Western Resources's earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 2.5% in the last year, Western Resources shareholders might be miffed that they lost 71%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 56% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. You could get a better understanding of Western Resources's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.