Stock Analysis

Investors one-year losses continue as Veridis Environment (TLV:VRDS) dips a further 14% this week, earnings continue to decline

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TASE:VRDS
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Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Veridis Environment Ltd (TLV:VRDS) have suffered share price declines over the last year. The share price is down a hefty 55% in that time. Because Veridis Environment hasn't been listed for many years, the market is still learning about how the business performs. The last week also saw the share price slip down another 14%. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.

After losing 14% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for Veridis Environment

SWOT Analysis for Veridis Environment

Strength
  • Earnings growth over the past year exceeded the industry.
  • Dividends are covered by earnings and cash flows.
Weakness
  • Interest payments on debt are not well covered.
  • Dividend is low compared to the top 25% of dividend payers in the Commercial Services market.
  • Current share price is above our estimate of fair value.
  • Shareholders have been diluted in the past year.
Opportunity
  • VRDS' financial characteristics indicate limited near-term opportunities for shareholders.
  • Lack of analyst coverage makes it difficult to determine VRDS' earnings prospects.
Threat
  • Debt is not well covered by operating cash flow.

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).

Unfortunately Veridis Environment reported an EPS drop of 0.8% for the last year. The share price decline of 55% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders are more nervous about the business.

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

earnings-per-share-growth
TASE:VRDS Earnings Per Share Growth June 1st 2023

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

We doubt Veridis Environment shareholders are happy with the loss of 55% over twelve months (even including dividends). That falls short of the market, which lost 16%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 11%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Take risks, for example - Veridis Environment has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

We will like Veridis Environment better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

Valuation is complex, but we're helping make it simple.

Find out whether Veridis Environment is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.