Optimism around Brunswick (NYSE:BC) delivering new earnings growth may be shrinking as stock declines 9.1% this past week

The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Brunswick Corporation (NYSE:BC) have tasted that bitter downside in the last year, as the share price dropped 33%. That contrasts poorly with the market return of 26%. Even if you look out three years, the returns are still disappointing, with the share price down32% in that time. The falls have accelerated recently, with the share price down 20% in the last three months.

If the past week is anything to go by, investor sentiment for Brunswick isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Brunswick

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 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, Brunswick had to report a 39% decline in EPS over the last year. We note that the 33% share price drop is very close to the EPS drop. So it seems that the market sentiment has not changed much, despite the weak results. Rather, the share price is remains a similar multiple of the EPS, suggesting the outlook remains the same.

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

Dive deeper into Brunswick's key metrics by checking this interactive graph of Brunswick's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 26% in the last year, Brunswick shareholders lost 31% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Brunswick better, we need to consider many other factors. Even so, be aware that Brunswick is showing 2 warning signs in our investment analysis , and 1 of those is significant...

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 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.