Investing in stocks comes with the risk that the share price will fall. And there’s no doubt that Fellow Finance Oyj (HEL:FELLOW) stock has had a really bad year. In that relatively short period, the share price has plunged 53%. Because Fellow Finance Oyj hasn’t been listed for many years, the market is still learning about how the business performs. Furthermore, it’s down 49% in about a quarter. That’s not much fun for holders.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Unhappily, Fellow Finance Oyj had to report a 75% decline in EPS over the last year. This fall in the EPS is significantly worse than the 53% the share price fall. So the market may not be too worried about the EPS figure, at the moment — or it may have expected earnings to drop faster. With a P/E ratio of 57.81, it’s fair to say the market sees an EPS rebound on the cards.
The image below shows how EPS has tracked over time.
It might be well worthwhile taking a look at our free report on Fellow Finance Oyj’s earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 9.6% in the last year, Fellow Finance Oyj shareholders might be miffed that they lost 53% (even including dividends) . However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 49% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. Is Fellow Finance Oyj cheap compared to other companies? These 3 valuation measures might help you decide.
But note: Fellow Finance Oyj may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FI exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.