Quanex Building Products (NYSE:NX) adds US$51m to market cap in the past 7 days, though investors from a year ago are still down 51%

The nature of investing is that you win some, and you lose some. And unfortunately for Quanex Building Products Corporation (NYSE:NX) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 52% in that time. However, the longer term returns haven't been so bad, with the stock down 26% in the last three years. Furthermore, it's down 21% in about a quarter. That's not much fun for holders.

On a more encouraging note the company has added US$51m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

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While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year Quanex Building Products saw its earnings per share drop below zero. While this may prove temporary, we'd consider it a negative, so it doesn't surprise us that the stock price is down. Of course, if the company can turn the situation around, investors will likely profit.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Quanex Building Products' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Quanex Building Products shareholders are down 51% for the year (even including dividends), but the market itself is up 16%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Quanex Building Products better, we need to consider many other factors. For example, we've discovered 2 warning signs for Quanex Building Products (1 is concerning!) that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

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.