Investors three-year losses continue as Gilat Satellite Networks (NASDAQ:GILT) dips a further 11% this week, earnings continue to decline

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Gilat Satellite Networks Ltd. (NASDAQ:GILT) have had an unfortunate run in the last three years. Sadly for them, the share price is down 61% in that time. And more recent buyers are having a tough time too, with a drop of 35% in the last year. Shareholders have had an even rougher run lately, with the share price down 27% in the last 90 days.

Since Gilat Satellite Networks has shed US$29m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Gilat Satellite Networks

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.

Gilat Satellite Networks saw its EPS decline at a compound rate of 19% per year, over the last three years. This reduction in EPS is slower than the 27% annual reduction in the share price. So it seems the market was too confident about the business, in the past. This increased caution is also evident in the rather low P/E ratio, which is sitting at 10.14.

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

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Gilat Satellite Networks' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 14% in the last year, Gilat Satellite Networks shareholders lost 35%. 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 8% 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. It's always interesting to track share price performance over the longer term. But to understand Gilat Satellite Networks better, we need to consider many other factors. For example, we've discovered 1 warning sign for Gilat Satellite Networks that you should be aware of before investing here.

But note: Gilat Satellite Networks 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 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.

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