The past one-year earnings decline for ODP (NASDAQ:ODP) likely explains shareholders long-term losses

The ODP Corporation (NASDAQ:ODP) shareholders will doubtless be very grateful to see the share price up 37% in the last quarter. But that's small comfort given the dismal price performance over the last year. Like a receding glacier in a warming world, the share price has melted 56% in that period. Some might say the recent bounce is to be expected after such a bad drop. It may be that the fall was an overreaction.

While the stock has risen 9.9% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

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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. 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.

Unfortunately ODP reported an EPS drop of 72% for the last year. The share price fall of 56% 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.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

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A Different Perspective

Investors in ODP had a tough year, with a total loss of 56%, against a market gain of about 19%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. To that end, you should be aware of the 2 warning signs we've spotted with ODP .

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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.