Great Lakes Dredge & Dock (NASDAQ:GLDD) earnings and shareholder returns have been trending downwards for the last three years, but the stock rallies 13% this past week

Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) shareholders should be happy to see the share price up 25% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 36% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

Check out our latest analysis for Great Lakes Dredge & Dock

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 five years of share price growth, Great Lakes Dredge & Dock moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move.

Arguably the revenue decline of 7.2% per year has people thinking Great Lakes Dredge & Dock is shrinking. And that's not surprising, since it seems unlikely that EPS growth can continue for long in the absence of revenue growth.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that Great Lakes Dredge & Dock has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Great Lakes Dredge & Dock will earn in the future (free profit forecasts).

A Different Perspective

Great Lakes Dredge & Dock shareholders are up 18% for the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 3% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Great Lakes Dredge & Dock better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Great Lakes Dredge & Dock .

Of course Great Lakes Dredge & Dock may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com