MindChamps PreSchool (SGX:CNE) Share Prices Have Dropped 60% In The Last Three Years

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of MindChamps PreSchool Limited (SGX:CNE) have had an unfortunate run in the last three years. Sadly for them, the share price is down 60% in that time. And over the last year the share price fell 30%, so we doubt many shareholders are delighted. The good news is that the stock is up 1.7% in the last week.

See our latest analysis for MindChamps PreSchool

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.

During the unfortunate three years of share price decline, MindChamps PreSchool actually saw its earnings per share (EPS) improve by 5.0% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

It looks to us like the market was probably too optimistic around growth three years ago. Looking to other metrics might better explain the share price change.

We note that, in three years, revenue has actually grown at a 28% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating MindChamps PreSchool further; while we may be missing something on this analysis, there might also be an opportunity.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

MindChamps PreSchool shareholders are down 30% for the year, falling short of the market return. The market shed around 2.9%, no doubt weighing on the stock price. The three-year loss of 17% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for MindChamps PreSchool you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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