Investing in stocks inevitably means buying into some companies that perform poorly. But long term MindChamps PreSchool Limited (SGX:CNE) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 63% decline in the share price in that time. The silver lining is that the stock is up 3.7% in about a week.
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 way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the three years that the share price fell, MindChamps PreSchool's earnings per share (EPS) dropped by 19% each year. This reduction in EPS is slower than the 28% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into MindChamps PreSchool's key metrics by checking this interactive graph of MindChamps PreSchool's earnings, revenue and cash flow.
A Different Perspective
MindChamps PreSchool shareholders are down 13% for the year, but the broader market is up 26%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. However, the loss over the last year isn't as bad as the 17% per annum loss investors have suffered over the last three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand MindChamps PreSchool better, we need to consider many other factors. To that end, you should be aware of the 4 warning signs we've spotted with MindChamps PreSchool .
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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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