Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Veritiv Corporation (NYSE:VRTV) have tasted that bitter downside in the last year, as the share price dropped 33%. That’s well bellow the market return of 3.1%. Longer term shareholders haven’t suffered as badly, since the stock is down a comparatively less painful 20% in three years. On top of that, the share price has dropped a further 26% in a month. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Unhappily, Veritiv had to report a 17% decline in EPS over the last year. This was, in part, due to extraordinary items impacting earnings. In fact, it actually made a loss over the last twelve months. This reduction in EPS is not as bad as the 33% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on Veritiv’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Veritiv shareholders are down 33% for the year, but the broader market is up 3.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 7.1% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. If you would like to research Veritiv in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.