UK markets close in 3 hours 30 minutes
  • FTSE 100

    7,541.78
    -25.76 (-0.34%)
     
  • FTSE 250

    19,205.68
    -123.90 (-0.64%)
     
  • AIM

    840.82
    -9.90 (-1.16%)
     
  • GBP/EUR

    1.1616
    +0.0001 (+0.01%)
     
  • GBP/USD

    1.2225
    +0.0031 (+0.25%)
     
  • BTC-GBP

    13,912.52
    -271.27 (-1.91%)
     
  • CMC Crypto 200

    401.28
    -9.93 (-2.42%)
     
  • S&P 500

    3,998.84
    -72.86 (-1.79%)
     
  • DOW

    33,947.10
    -482.78 (-1.40%)
     
  • CRUDE OIL

    75.68
    -1.25 (-1.62%)
     
  • GOLD FUTURES

    1,791.80
    +10.50 (+0.59%)
     
  • NIKKEI 225

    27,885.87
    +65.47 (+0.24%)
     
  • HANG SENG

    19,441.18
    -77.11 (-0.40%)
     
  • DAX

    14,426.60
    -21.01 (-0.15%)
     
  • CAC 40

    6,687.74
    -9.22 (-0.14%)
     

Positive earnings growth hasn't been enough to get Dr. Martens (LON:DOCS) shareholders a favorable return over the last year

Dr. Martens plc (LON:DOCS) shareholders will doubtless be very grateful to see the share price up 32% in the last quarter. But in truth the last year hasn't been good for the share price. After all, the share price is down 35% in the last year, significantly under-performing the market.

While the last year has been tough for Dr. Martens shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for Dr. Martens

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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.

Dr. Martens stole the show with its EPS rocketing, in the last year. While the business is unlikely to sustain such a high growth rate for long, it's great to see. As you can imagine, the share price action therefore perturbs us. So it's worth taking a look at some other metrics.

Dr. Martens managed to grow revenue over the last year, which is usually a real positive. Since we can't easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Dr. Martens

A Different Perspective

Dr. Martens shareholders are down 34% for the year (even including dividends), even worse than the market loss of 2.9%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Putting aside the last twelve months, it's good to see the share price has rebounded by 32%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Dr. Martens has 2 warning signs we think you should be aware of.

Of course Dr. Martens may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here