Stock Analysis

Would Shareholders Who Purchased PQ Group Holdings' (NYSE:PQG) Stock Three Years Be Happy With The Share price Today?

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NYSE:ECVT
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While it may not be enough for some shareholders, we think it is good to see the PQ Group Holdings Inc. (NYSE:PQG) share price up 18% in a single quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 15% in the last three years, falling well short of the market return.

See our latest analysis for PQ Group Holdings

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

Although the share price is down over three years, PQ Group Holdings actually managed to grow EPS by 109% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price.

The company has kept revenue pretty healthy over the last three years, so we doubt that explains the falling share price. There doesn't seem to be any clear correlation between the fundamental business metrics and the share price. That could mean that the stock was previously overrated, or it could spell opportunity now.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NYSE:PQG Earnings and Revenue Growth December 14th 2020

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. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

PQ Group Holdings shareholders are down 14% for the year, but the broader market is up 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 5% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. For instance, we've identified 4 warning signs for PQ Group Holdings (1 is a bit concerning) that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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What are the risks and opportunities for Ecovyst?

Ecovyst Inc. provides specialty catalysts and services in the United States, the Netherlands, the United Kingdom, and internationally.

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Rewards

  • Trading at 51.8% below our estimate of its fair value

  • Earnings are forecast to grow 24.32% per year

  • Earnings grew by 40.3% over the past year

Risks

  • Debt is not well covered by operating cash flow

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