IG Design Group plc (LON:IGR) shareholders should be happy to see the stock price rise 21% over the past month. But only short-sighted people could ignore the meteoric fall in three years. The stock price sank like a leaky ship, down 89% during that time. So it’s nice to see a bit of improvement. Only time will tell if the company can sustain the turnaround. We really hope that anyone weathering this price drop has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
With the stock down 15% in the past week, it’s worth taking a look at the trade performance and seeing if there are any red flags.
It is undeniable that markets are sometimes efficient, but prices do not always reflect the underlying performance of companies. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).
During the three years of declining stock prices, IG Design Group’s earnings per share (EPS) fell 34% each year. This reduction in EPS is slower than the 53% annual reduction in share price. It is therefore likely that the drop in EPS disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 8.60.
The image below shows how EPS has tracked over time (if you click on the image you can see more details).
It might be interesting to take a look at our free IG Design Group earnings, revenue and cash flow report.
A different perspective
We regret to report that IG Design Group shareholders are down 88% for the year (even including dividends). Unfortunately, this is worse than the general market decline of 4.9%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. Unfortunately, last year’s performance may point to unresolved challenges, given that it was worse than the 12% annualized loss over the past half-decade. We realize that Baron Rothschild said investors should “buy when there’s blood in the streets”, but we caution that investors must first make sure they are buying a high quality company. It is always interesting to follow the evolution of the share price over the long term. But to better understand IG Design Group, we need to consider many other factors. Like risks, for example. Every business has them, and we’ve spotted 6 warning signs for IG Design Group (including 2 a little unpleasant!) to know.
We’ll like IG Design Group better if we see big insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.
Please note that the market returns quoted in this article reflect the market-weighted average returns of the shares currently trading on UK stock exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.