Lamb Weston Holdings (NYSE:LW) shareholders have lost 51% over 1 year, earnings decline likely the culprit

The nature of investing is that you win some, and you lose some. And unfortunately for Lamb Weston Holdings, Inc. (NYSE:LW) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 52% in that time. However, the longer term returns haven't been so bad, with the stock down 3.6% in the last three years. Furthermore, it's down 36% in about a quarter. That's not much fun for holders.

With the stock having lost 3.6% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Lamb Weston Holdings

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).

Unfortunately Lamb Weston Holdings reported an EPS drop of 67% for the last year. The share price fall of 52% isn't as bad as the reduction in earnings per share. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

While the broader market gained around 15% in the last year, Lamb Weston Holdings shareholders lost 51% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Lamb Weston Holdings (of which 1 is significant!) you should know about.

Lamb Weston Holdings is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been 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.