Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that CVR Energy, Inc. (NYSE:CVI) stock has had a really bad year. To wit the share price is down 68% in that time. Even if you look out three years, the returns are still disappointing, with the share price down40% in that time. Furthermore, it's down 37% in about a quarter. That's not much fun for holders.
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).
Unhappily, CVR Energy had to report a 81% decline in EPS over the last year. This proportional reduction in earnings per share isn't far from the 68% decrease in the share price. So it seems that the market sentiment has not changed much, despite the weak results. Rather, the share price has approximately tracked EPS growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how CVR Energy has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at CVR Energy's financial health with this free report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We've already covered CVR Energy's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. CVR Energy's TSR of was a loss of 66% for the year. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
While the broader market gained around 15% in the last year, CVR Energy shareholders lost 66%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8.2% over the last half decade. We realise that Baron Rothschild 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 business. It's always interesting to track share price performance over the longer term. But to understand CVR Energy better, we need to consider many other factors. For example, we've discovered 4 warning signs for CVR Energy (1 shouldn't be ignored!) that you should be aware of before investing here.
We will like CVR Energy better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. 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 email@example.com.