Recent 4.7% pullback isn't enough to hurt long-term Equinox Gold (TSE:EQX) shareholders, they're still up 123% over 3 years

By
Simply Wall St
Published
November 21, 2021
TSX:EQX
Source: Shutterstock

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. To wit, the Equinox Gold Corp. (TSE:EQX) share price has flown 123% in the last three years. Most would be happy with that. On top of that, the share price is up 24% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

Since the long term performance has been good but there's been a recent pullback of 4.7%, let's check if the fundamentals match the share price.

Check out our latest analysis for Equinox Gold

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

Equinox Gold became profitable within the last three years. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
TSX:EQX Earnings Per Share Growth November 22nd 2021

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Equinox Gold's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Equinox Gold shareholders are down 23% for the year, but the market itself is up 31%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Equinox Gold is showing 3 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

Equinox Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

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