Investors three-year losses continue as Victoria Gold (TSE:VGCX) dips a further 12% this week, earnings continue to decline

While it may not be enough for some shareholders, we think it is good to see the Victoria Gold Corp. (TSE:VGCX) share price up 15% in a single quarter. But that is small recompense for the exasperating returns over three years. Indeed, the share price is down a tragic 60% in the last three years. So it is really good to see an improvement. Perhaps the company has turned over a new leaf.

Since Victoria Gold has shed CA$64m 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 Victoria Gold

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).

Victoria Gold saw its EPS decline at a compound rate of 47% per year, over the last three years. In comparison the 27% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

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. Dive deeper into the earnings by checking this interactive graph of Victoria Gold's earnings, revenue and cash flow.

A Different Perspective

Victoria Gold shareholders are down 11% for the year, but the market itself is up 12%. 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. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Victoria Gold , and understanding them should be part of your investment process.

Victoria Gold is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com