The one-year earnings decline is not helping Revolve Group's (NYSE:RVLV share price, as stock falls another 5.6% in past week

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Revolve Group, Inc. (NYSE:RVLV) shareholders over the last year, as the share price declined 47%. That falls noticeably short of the market decline of around 1.0%. Longer term investors have fared much better, since the share price is up 2.1% in three years. The falls have accelerated recently, with the share price down 42% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Since Revolve Group has shed US$68m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Revolve Group

SWOT Analysis for Revolve Group

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.

Unfortunately Revolve Group reported an EPS drop of 50% for the last year. This proportional reduction in earnings per share isn't far from the 47% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Instead, the change in the share price seems to reduction in earnings per share, alone.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Revolve Group's earnings, revenue and cash flow.

A Different Perspective

Over the last year, Revolve Group shareholders took a loss of 47%. In contrast the market gained about 1.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Fortunately the longer term story is brighter, with total returns averaging about 0.7% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Revolve Group (of which 1 is a bit concerning!) you should know about.

Of course Revolve Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.