The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Premier Explosives Limited (NSE:PREMEXPLQ) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 51% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 30% lower in that time. Furthermore, it's down 22% in about a quarter. That's not much fun for holders.
See our latest analysis for Premier Explosives
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).
During the unfortunate three years of share price decline, Premier Explosives actually saw its earnings per share (EPS) improve by 19% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
The modest 1.6% dividend yield is unlikely to be guiding the market view of the stock. Revenue is actually up 10% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worht worth investigating Premier Explosives further; while we may be missing something on this analysis, there might also be an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We know that Premier Explosives has improved its bottom line lately, but what does the future have in store? This free report showing analyst forecasts should help you form a view on Premier Explosives
A Different Perspective
Premier Explosives shareholders are down 29% for the year (even including dividends), falling short of the market return. The market shed around 9.4%, no doubt weighing on the stock price. The three-year loss of 21% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. If you would like to research Premier Explosives in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.