Yahoo Finance Further weakness as Booktopia Group (ASX:BKG) drops 14% this week, taking one-year losses to 75%
Even the best investor on earth makes unsuccessful investments. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a Booktopia Group Limited (ASX:BKG) shareholder over the last year, since the stock price plummeted 75% in that time. That'd be a striking reminder about the importance of diversification. Booktopia Group may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 50% in the last three months.
If the past week is anything to go by, investor sentiment for Booktopia Group isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
View our latest analysis for Booktopia Group
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.
During the last year Booktopia Group grew its earnings per share, moving from a loss to a profit.
We're surprised that the share price is lower given that improvement. If the improved profitability is a sign of things to come, then right now may prove the perfect time to pop this stock on your watchlist.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. 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
While Booktopia Group shareholders are down 75% for the year, the market itself is up 11%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 50% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Take risks, for example - Booktopia Group has 2 warning signs we think 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 AU 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.
