Co-Diagnostics' One-Year Earnings Decline Translates Into Poor Shareholder Returns

Co-Diagnostics, Inc. (NASDAQ:CODX) shareholders should be happy to see the share price up 29% in the last month. But that doesn't change the fact that the returns over the last year have been disappointing. Like an arid lake in a warming world, shareholder value has evaporated, with the share price down 54% in that time. Some might say the recent bounce is to be expected after such a bad drop. It may be that the fall was an overreaction.

On a more encouraging note the company has added US$13m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

See our latest analysis for Co-Diagnostics

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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, Co-Diagnostics had to report a 67% decline in EPS over the last year. This fall in the EPS is significantly worse than the 54% the share price fall. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

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

It is of course excellent to see how Co-Diagnostics has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Co-Diagnostics stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We regret to report that Co-Diagnostics shareholders are down 54% for the year. Unfortunately, that's worse than the broader market decline of 11%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 4%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Co-Diagnostics better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Co-Diagnostics (of which 1 makes us a bit uncomfortable!) you should know about.

But note: Co-Diagnostics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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