Shareholders in EcoRodovias Infraestrutura e Logística (BVMF:ECOR3) have lost 50%, as stock drops 7.6% this past week

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of EcoRodovias Infraestrutura e Logística S.A. (BVMF:ECOR3) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 52% drop in the share price over that period. The falls have accelerated recently, with the share price down 32% in the last three months.

Since EcoRodovias Infraestrutura e Logística has shed R$369m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for EcoRodovias Infraestrutura e Logística

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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 five years of share price growth, EcoRodovias Infraestrutura e Logística moved from a loss to profitability. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.

With a rather small yield of just 0.1% we doubt that the stock's share price is based on its dividend. Revenue is actually up 30% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching EcoRodovias Infraestrutura e Logística more closely, as sometimes stocks fall unfairly. This could present an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that EcoRodovias Infraestrutura e Logística has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at EcoRodovias Infraestrutura e Logística's financial health with this free report on its balance sheet.

A Different Perspective

Investors in EcoRodovias Infraestrutura e Logística had a tough year, with a total loss of 0.9% (including dividends), against a market gain of about 4.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 6% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand EcoRodovias Infraestrutura e Logística better, we need to consider many other factors. For instance, we've identified 1 warning sign for EcoRodovias Infraestrutura e Logística that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.