Yahoo Finance Sol-Gel Technologies (NASDAQ:SLGL) investors are sitting on a loss of 45% if they invested a year ago
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Sol-Gel Technologies Ltd. (NASDAQ:SLGL) shareholders over the last year, as the share price declined 45%. That's disappointing when you consider the market declined 25%. Even if you look out three years, the returns are still disappointing, with the share price down39% in that time. Shareholders have had an even rougher run lately, with the share price down 11% in the last 90 days. But this could be related to the weak market, which is down 11% in the same period.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
View our latest analysis for Sol-Gel Technologies
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the last year Sol-Gel Technologies 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.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Sol-Gel Technologies has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Sol-Gel Technologies stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
The last twelve months weren't great for Sol-Gel Technologies shares, which performed worse than the market, costing holders 45%. Meanwhile, the broader market slid about 25%, likely weighing on the stock. The three-year loss of 12% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. For example, we've discovered 1 warning sign for Sol-Gel Technologies that you should be aware of before investing here.
But note: Sol-Gel Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
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