The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Commercial Vehicle Group, Inc. (NASDAQ:CVGI) have tasted that bitter downside in the last year, as the share price dropped 48%. That’s disappointing when you consider the market declined 12%. At least the damage isn’t so bad if you look at the last three years, since the stock is down 9.0% in that time. Shareholders have had an even rougher run lately, with the share price down 22% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 9.0% in the same timeframe.
Since Commercial Vehicle Group has shed US$26m from its value in the past 7 days, let’s see if the longer term decline has been driven by the business’ economics.
See our latest analysis for Commercial Vehicle Group
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Commercial Vehicle Group managed to increase earnings per share from a loss to a profit, over the last 12 months.
The result looks like a strong improvement to us, so we’re surprised the market has sold down the shares. 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.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
NasdaqGS:CVGI Earnings Per Share Growth May 25th 2022
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on Commercial Vehicle Group’s earnings, revenue and cash flow.
A Different Perspective
While the broader market lost about 12% in the twelve months, Commercial Vehicle Group shareholders did even worse, losing 48%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. 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 Commercial Vehicle Group better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 3 warning signs for Commercial Vehicle Group (of which 2 shouldn’t be ignored!) you should know about.
Commercial Vehicle Group is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.