CoAssets Limited (ASX:CA8) shareholders should be happy to see the share price up 20% in the last month. But that’s small comfort given the dismal price performance over the last year. Specifically, the stock price slipped by 56% in that time. Some might say the recent bounce is to be expected after such a bad drop. You could argue that the sell-off was too severe.
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).
During the last year CoAssets 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).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of CoAssets’s earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 8.4% in the last year, CoAssets shareholders might be miffed that they lost 56%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It’s great to see a nice little 9.1% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Before deciding if you like the current share price, check how CoAssets scores on these 3 valuation metrics.
But note: CoAssets 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 AU exchanges.
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