The three-year shareholder returns and company earnings persist lower as Ameresco (NYSE:AMRC) stock falls a further 8.0% in past week

Investing in stocks inevitably means buying into some companies that perform poorly. But long term Ameresco, Inc. (NYSE:AMRC) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 55% decline in the share price in that time. The falls have accelerated recently, with the share price down 23% in the last three months.

Since Ameresco has shed US$117m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Ameresco

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

Ameresco saw its EPS decline at a compound rate of 8.2% per year, over the last three years. This reduction in EPS is slower than the 23% annual reduction in the share price. So it seems the market was too confident about the business, in the past.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Ameresco's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Investors in Ameresco had a tough year, with a total loss of 1.5%, against a market gain of about 23%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. 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 Ameresco better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Ameresco .

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).

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.