Grupo de Moda SOMA (BVMF:SOMA3) shareholders are up 12% this past week, but still in the red over the last year

By
Simply Wall St
Published
January 24, 2022
BOVESPA:SOMA3
Source: Shutterstock

Grupo de Moda SOMA S.A. (BVMF:SOMA3) shareholders should be happy to see the share price up 12% in the last week. But that is minimal compensation for the share price under-performance over the last year. The cold reality is that the stock has dropped 17% in one year, under-performing the market.

The recent uptick of 12% could be a positive sign of things to come, so let's take a lot at historical fundamentals.

See our latest analysis for Grupo de Moda SOMA

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...' 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.

During the last year Grupo de Moda SOMA grew its earnings per share, moving from a loss to a profit.

Earnings per share growth rates aren't particularly useful for comparing with the share price, when a company has moved from loss to profit. But we may find different metrics more enlightening.

Grupo de Moda SOMA managed to grow revenue over the last year, which is usually a real positive. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
BOVESPA:SOMA3 Earnings and Revenue Growth January 24th 2022

We know that Grupo de Moda SOMA has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Grupo de Moda SOMA

A Different Perspective

We doubt Grupo de Moda SOMA shareholders are happy with the loss of 17% over twelve months. That falls short of the market, which lost 8.9%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. Notably, the loss over the last year isn't as bad as the 18% drop in the last three months. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. 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. Even so, be aware that Grupo de Moda SOMA is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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