Hoist Finance's (STO:HOFI) Shareholders Are Down 61% On Their Shares

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Hoist Finance AB (publ) (STO:HOFI) have had an unfortunate run in the last three years. Sadly for them, the share price is down 61% in that time. And more recent buyers are having a tough time too, with a drop of 30% in the last year. The good news is that the stock is up 2.1% in the last week.

View our latest analysis for Hoist Finance

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.

During the three years that the share price fell, Hoist Finance's earnings per share (EPS) dropped by 65% each year. In comparison the 27% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in. This positive sentiment is also reflected in the generous P/E ratio of 141.60.

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

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

A Different Perspective

Hoist Finance shareholders are down 30% for the year, but the market itself is up 15%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. 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. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Hoist Finance you should know about.

But note: Hoist Finance may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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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. 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.
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