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Canada Goose Holdings (TSE:GOOS) sheds CA$295m, company earnings and investor returns have been trending downwards for past three years

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The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Canada Goose Holdings Inc. (TSE:GOOS) have had an unfortunate run in the last three years. Unfortunately, they have held through a 51% decline in the share price in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 50% lower in that time. Furthermore, it's down 19% in about a quarter. That's not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 8.1% in the same timeframe.

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

See our latest analysis for Canada Goose Holdings

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 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.

During the three years that the share price fell, Canada Goose Holdings' earnings per share (EPS) dropped by 12% each year. This reduction in EPS is slower than the 21% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
earnings-per-share-growth

We know that Canada Goose Holdings has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

A Different Perspective

While the broader market gained around 1.3% in the last year, Canada Goose Holdings shareholders lost 50%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Canada Goose Holdings , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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