Three-year investor losses hit 79% as stock loses £ 20million last week

Every investor on earth sometimes makes the wrong calls. But very bad investments should be rare. So consider for a moment the misfortune of James fisher and son plc (LON: FSJ) investors who have held the stock for three years when it has fallen 80%. This could cause serious doubt as to the correctness of the initial decision to buy the stock, to put it mildly. And newer buyers are also going through a rough patch, dropping 66% last year. In addition, it has fallen by 67% in about a quarter. It’s not a lot of fun for the holders.

After losing 11% last week, it’s worth studying the fundamentals of the business to see what we can infer from past performance.

Check out our latest analysis for James Fisher and Sons

In his essay Graham-and-Doddsville super-investors Warren Buffett described how stock prices don’t always rationally reflect a company’s value. A flawed but reasonable way to gauge how sentiment is changing around a company is to compare earnings per share (EPS) with the stock price.

In the three years that the stock price fell, James Fisher and Sons’ earnings per share (EPS) fell significantly, falling to a loss. Since the company has fallen into a loss position, it is difficult to compare the change in EPS with the change in the share price. But it’s safe to say that we generally expect the stock price to be lower as a result!

The image below shows how EPS has tracked over time (if you click on the image you can see more detail).

LSE: FSJ Growth in earnings per share December 2, 2021

It’s good to see that there have been some significant insider buys over the past three months. This is a positive point. That said, we believe earnings and revenue growth trends are even more important factors to consider. Dive Deeper into Earnings by checking out this interactive Earnings, Income & Cash Flow graph from James Fisher and Sons.

A different perspective

Investors in James Fisher and Sons had a rough year, with a total loss of 66%, compared to a market gain of around 16%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Sadly, last year’s performance capped a bad run, with shareholders facing a total loss of 12% per year over five years. Generally speaking, long-term weakness in stock prices can be a bad sign, although contrarian investors may want to seek the stock in hopes of a rally. I find it very interesting to look at the stock price over the long term as an indicator of company performance. But to really understand better, we have to take other information into account as well. For example, we discovered 2 warning signs for James Fisher and Sons (1 doesn’t suit us very well!) Which you should be aware of before investing here.

There are many other companies in which insiders buy shares. You probably do not want to miss it free list of growing companies that insiders buy.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on UK stock exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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