Earnings growth of 95% over 1 year hasn't been enough to translate into positive returns for RESOL HOLDINGSLtd (TSE:5261) shareholders

Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by RESOL HOLDINGS Co.,Ltd. (TSE:5261) shareholders over the last year, as the share price declined 15%. That contrasts poorly with the market decline of 1.5%. On the other hand, the stock is actually up 1.0% over three years. In the last ninety days we've seen the share price slide 21%. However, one could argue that the price has been influenced by the general market, which is down 18% in the same timeframe.

After losing 15% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for RESOL HOLDINGSLtd

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Even though the RESOL HOLDINGSLtd share price is down over the year, its EPS actually improved. Of course, the situation might betray previous over-optimism about growth.

The divergence between the EPS and the share price is quite notable, during the year. But we might find some different metrics explain the share price movements better.

RESOL HOLDINGSLtd's revenue is actually up 17% over the last year. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at RESOL HOLDINGSLtd's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 1.5% in the twelve months, RESOL HOLDINGSLtd shareholders did even worse, losing 14% (even including dividends). However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 1.7%, 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. Case in point: We've spotted 2 warning signs for RESOL HOLDINGSLtd you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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