ONE Group Hospitality (NASDAQ:STKS) adds US$11m to market cap in the past 7 days, though investors from three years ago are still down 70%

This week we saw the The ONE Group Hospitality, Inc. (NASDAQ:STKS) share price climb by 10%. But over the last three years we've seen a quite serious decline. Tragically, the share price declined 70% in that time. So the improvement may be a real relief to some. After all, could be that the fall was overdone.

The recent uptick of 10% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for ONE Group Hospitality

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.

Over the three years that the share price declined, ONE Group Hospitality's earnings per share (EPS) dropped significantly, falling to a loss. Extraordinary items contributed to this situation. Since the company has fallen to a loss making position, it's hard to compare the change in EPS with the share price change. However, we can say we'd expect to see a falling share price in this scenario.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free interactive report on ONE Group Hospitality's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

ONE Group Hospitality shareholders are down 14% for the year, but the market itself is up 38%. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with ONE Group Hospitality , and understanding them should be part of your investment process.

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.