Even though Genovis AB (publ.) (STO:GENO) has lost kr259m market cap in last 7 days, shareholders are still up 81% over 5 years

The last three months have been tough on Genovis AB (publ.) (STO:GENO) shareholders, who have seen the share price decline a rather worrying 38%. On the other hand the returns over the last half decade have not been bad. After all, the stock has performed better than the market (71%) in that time, and is up 81%.

While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

Check out our latest analysis for Genovis AB (publ.)

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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 last half decade, Genovis AB (publ.) became profitable. That would generally be considered a positive, so we'd hope to see the share price to rise. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. In fact, the Genovis AB (publ.) stock price is 27% lower in the last three years. During the same period, EPS grew by 112% each year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -10% per year.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Genovis AB (publ.)'s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Genovis AB (publ.) shareholders are down 48% 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. Longer term investors wouldn't be so upset, since they would have made 13%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Genovis AB (publ.) better, we need to consider many other factors. For example, we've discovered 1 warning sign for Genovis AB (publ.) that you should be aware of before investing here.

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 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.