Volatility 101: Should Alaska Communications Systems Group (NASDAQ:ALSK) Shares Have Dropped 17%?

While it may not be enough for some shareholders, we think it is good to see the Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) share price up 16% in a single quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 17% in a year, falling short of the returns you could get by investing in an index fund.

See our latest analysis for Alaska Communications Systems Group

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. 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).

Alaska Communications Systems Group managed to increase earnings per share from a loss to a profit, over the last 12 months. Earnings per share growth rates aren’t particularly useful for comparing with the share price, when a company has moved from loss to profit. But we may find different metrics more enlightening.

Revenue was pretty flat on last year, which isn’t too bad. But the share price might be lower because the market expected a meaningful improvement, and got none.

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

NasdaqGS:ALSK Income Statement, March 8th 2019
NasdaqGS:ALSK Income Statement, March 8th 2019

Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While the broader market gained around 0.9% in the last year, Alaska Communications Systems Group shareholders lost 17%. 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 1.9% per year over five years. We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality businesses. Before spending more time on Alaska Communications Systems Group it might be wise to click here to see if insiders have been buying or selling shares.

Of course Alaska Communications Systems 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 US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.