Eolus Vind (STO:EOLU B) stock falls 13% in past week as three-year earnings and shareholder returns continue downward trend

It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So consider, for a moment, the misfortune of Eolus Vind AB (publ) (STO:EOLU B) investors who have held the stock for three years as it declined a whopping 72%. That'd be enough to cause even the strongest minds some disquiet. The more recent news is of little comfort, with the share price down 49% in a year. Furthermore, it's down 37% in about a quarter. That's not much fun for holders.

Since Eolus Vind has shed kr151m 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 Eolus Vind

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years that the share price fell, Eolus Vind's earnings per share (EPS) dropped by 21% each year. This reduction in EPS is slower than the 35% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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. This free interactive report on Eolus Vind's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Eolus Vind shareholders are down 48% for the year (even including dividends), but the market itself is up 26%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 - Eolus Vind has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.

Eolus Vind 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 Swedish 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.