Optimism around Top Glove Corporation Bhd (KLSE:TOPGLOV) delivering new earnings growth may be shrinking as stock declines 7.1% this past week
Top Glove Corporation Bhd. (KLSE:TOPGLOV) shareholders should be happy to see the share price up 17% in the last month. But that's small comfort given the dismal price performance over the last year. During that time the share price has sank like a stone, descending 70%. So the bounce should be viewed in that context. You could argue that the sell-off was too severe.
After losing 7.1% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
See our latest analysis for Top Glove Corporation Bhd
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. 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.
Unhappily, Top Glove Corporation Bhd had to report a 97% decline in EPS over the last year. This fall in the EPS is significantly worse than the 70% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
Top Glove Corporation Bhd shareholders are down 70% for the year, but the market itself is up 0.6%. 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 0.8% over the last half decade. 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 Top Glove Corporation Bhd better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Top Glove Corporation Bhd you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MY 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.
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