This month, we saw the ZK International Group Co., Ltd. (NASDAQ:ZKIN) up an impressive 32%. But that hardly compensates for the shocking decline over the last twelve months. During that time the share price has plummeted like a stone, down 72%. So the rise may not be much consolation. Only time will tell if the company can sustain the turnaround.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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, ZK International Group had to report a 3.7% decline in EPS over the last year. The share price decline of 72% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 3.88.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on ZK International Group’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
While ZK International Group shareholders are down 72% for the year, the market itself is up 9.9%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. It’s great to see a nice little 16% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it’s the start of a new trend. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
But note: ZK International Group 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.