AVG Logistics Limited (NSE:AVG) shareholders should be happy to see the share price up 18% in the last month. But that doesn’t change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 10% in a year, falling short of the returns you could get by investing in an index fund.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
Unfortunately AVG Logistics reported an EPS drop of 11% for the last year. We note that the 10% share price drop is very close to the EPS drop. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Instead, the change in the share price seems to reduction in earnings per share, alone.
You can see below how EPS has changed over time.
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
AVG Logistics shareholders are down 10% for the year, even worse than the market loss of 6.0%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. The share price decline seems to have halted in the most recent three months, with the relatively flat share price suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. Is AVG Logistics cheap compared to other companies? These 3 valuation measures might help you decide.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.