Sonos' (NASDAQ:SONO) earnings trajectory could turn positive as the stock rises 4.0% this past week

Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Sonos, Inc. (NASDAQ:SONO) have suffered share price declines over the last year. To wit the share price is down 54% in that time. On the other hand, the stock is actually up 9.0% over three years. The falls have accelerated recently, with the share price down 29% in the last three months.

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

Check out the opportunities and risks within the US Consumer Durables industry.

There is no denying that markets are sometimes efficient, but prices do not always reflect 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).

Unhappily, Sonos had to report a 38% decline in EPS over the last year. This reduction in EPS is not as bad as the 54% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Sonos has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Sonos' financial health with this free report on its balance sheet.

A Different Perspective

The last twelve months weren't great for Sonos shares, which performed worse than the market, costing holders 54%. The market shed around 23%, no doubt weighing on the stock price. Fortunately the longer term story is brighter, with total returns averaging about 2.9% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Sonos you should know about.

We will like Sonos better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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

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.