Hamat Group (TLV:HAMAT) sheds ₪53m, company earnings and investor returns have been trending downwards for past year

Even the best stock pickers will make plenty of bad investments. Anyone who held Hamat Group Ltd. (TLV:HAMAT) over the last year knows what a loser feels like. The share price has slid 67% in that time. At least the damage isn't so bad if you look at the last three years, since the stock is down 8.6% in that time. The falls have accelerated recently, with the share price down 35% in the last three months.

If the past week is anything to go by, investor sentiment for Hamat Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Hamat Group

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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Unhappily, Hamat Group had to report a 31% decline in EPS over the last year. The share price decline of 67% is actually more than the EPS drop. So it seems the market was too confident about the business, a year ago. The less favorable sentiment is reflected in its current P/E ratio of 5.41.

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

Dive deeper into Hamat Group's key metrics by checking this interactive graph of Hamat Group's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Hamat Group shareholders are down 66% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 16%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 0.8% 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. Consider for instance, the ever-present spectre of investment risk. We've identified 6 warning signs with Hamat Group , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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