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Earnings growth of 110% over 1 year hasn't been enough to translate into positive returns for Concentrix (NASDAQ:CNXC) shareholders

It's understandable if you feel frustrated when a stock you own sees a lower share price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. The Concentrix Corporation (NASDAQ:CNXC) is down 13% over a year, but the total shareholder return is -13% once you include the dividend. And that total return actually beats the market decline of 20%. Because Concentrix hasn't been listed for many years, the market is still learning about how the business performs. The share price has dropped 30% in three months. But this could be related to the weak market, which is down 19% in the same period.

If the past week is anything to go by, investor sentiment for Concentrix isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for Concentrix

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

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During the unfortunate twelve months during which the Concentrix share price fell, it actually saw its earnings per share (EPS) improve by 110%. It's quite possible that growth expectations may have been unreasonable in the past.

It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's easy to justify a look at some other metrics.

Given the yield is quite low, at 0.7%, we doubt the dividend can shed much light on the share price. Concentrix's revenue is actually up 18% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for Concentrix in this interactive graph of future profit estimates.

A Different Perspective

While they no doubt would have preferred make a profit, at least Concentrix shareholders didn't do too badly in the last year. Their loss of 13%, including dividends, actually beat the broader market, which lost around 20%. Things weren't so bad until the last three months, when the stock dropped 30%. It's always a worry to see a share price decline like that, but at the same time, it is an unavoidable part of investing. However, this could create an opportunity if the fundamentals remain strong. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Concentrix you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.