Stock Analysis

Advanced Emissions Solutions (NASDAQ:ADES) Share Prices Have Dropped 48% In The Last Three Years

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NasdaqGM:ADES
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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But if you try your hand at stock picking, your risk returning less than the market. We regret to report that long term Advanced Emissions Solutions, Inc. (NASDAQ:ADES) shareholders have had that experience, with the share price dropping 48% in three years, versus a market return of about 55%.

Check out our latest analysis for Advanced Emissions Solutions

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Advanced Emissions Solutions saw its share price decline over the three years in which its EPS also dropped, falling to a loss. This was, in part, due to extraordinary items impacting earnings. 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).

earnings-per-share-growth
NasdaqGM:ADES Earnings Per Share Growth March 13th 2021

This free interactive report on Advanced Emissions Solutions' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Advanced Emissions Solutions' total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Advanced Emissions Solutions' TSR of was a loss of 38% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Advanced Emissions Solutions shareholders are down 16% for the year, but the market itself is up 60%. 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 4% 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. 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. Even so, be aware that Advanced Emissions Solutions is showing 1 warning sign in our investment analysis , you should know about...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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