Shareholders 24% loss in Boyd Group Services (TSE:BYD) partly attributable to the company's decline in earnings over past year

The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Boyd Group Services Inc. (TSE:BYD) have tasted that bitter downside in the last year, as the share price dropped 24%. That's well below the market return of 9.5%. On the bright side, the stock is actually up 22% in the last three years. More recently, the share price has dropped a further 8.9% in a month. We do note, however, that the broader market is down 3.7% in that period, and this may have weighed on the share price.

While the last year has been tough for Boyd Group Services shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Our free stock report includes 3 warning signs investors should be aware of before investing in Boyd Group Services. Read for free now.

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, Boyd Group Services had to report a 72% decline in EPS over the last year. This fall in the EPS is significantly worse than the 24% the share price fall. It may have been that the weak EPS was not as bad as some had feared. With a P/E ratio of 131.12, it's fair to say the market sees an EPS rebound on the cards.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Boyd Group Services' earnings, revenue and cash flow.

A Different Perspective

Investors in Boyd Group Services had a tough year, with a total loss of 24% (including dividends), against a market gain of about 9.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Take risks, for example - Boyd Group Services has 3 warning signs (and 1 which is a bit concerning) we think you should know about.

Boyd Group Services is not the only stock that insiders are buying. For those who like to find lesser know companies 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 Canadian 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.