Did Changing Sentiment Drive Delta 9 Cannabis’ (TSE:DN) Share Price Down A Worrying 68%?

Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Delta 9 Cannabis Inc. (TSE:DN) have suffered share price declines over the last year. To wit the share price is down 68% in that time. Delta 9 Cannabis hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it’s down 20% in about a quarter. That’s not much fun for holders. Of course, this share price action may well have been influenced by the 20% decline in the broader market, throughout the period.

See our latest analysis for Delta 9 Cannabis

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 Delta 9 Cannabis grew its earnings per share, moving from a loss to a profit.

The result looks like a strong improvement to us, so we’re surprised the market has sold down the shares. 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).

TSX:DN Past and Future Earnings May 14th 2020
TSX:DN Past and Future Earnings May 14th 2020

It’s probably worth noting that the CEO is paid less than the median at similar sized 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 Delta 9 Cannabis’s earnings, revenue and cash flow.

A Different Perspective

We doubt Delta 9 Cannabis shareholders are happy with the loss of 68% over twelve months. That falls short of the market, which lost 15%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. The share price decline has continued throughout the most recent three months, down 20%, 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. Case in point: We’ve spotted 4 warning signs for Delta 9 Cannabis you should be aware of, and 2 of them are a bit unpleasant.

We will like Delta 9 Cannabis better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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