IBEX (NASDAQ:IBEX) investors are sitting on an 11% loss if they invested a year ago
Most people get a little frustrated if the price of a stock they own goes down. But often this does not reflect the fundamental performance of the company. Over the year the IBEX Limited (NASDAQ:IBEX) stock price fell 11%. But that actually exceeds the 18% drop in the market. We wouldn’t rush to pass judgment on IBEX because we don’t have a long-term track record to review. That’s down 14% in about a month. However, we note that the price may have been affected by the overall market, which fell 6.0% over the same period.
So let’s take a look and see if the company’s long-term performance has been in line with the progress of the underlying business.
Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly reactive dynamic systems and that investors are not always rational. An imperfect but reasonable way to gauge changing sentiment around a company is to compare earnings per share (EPS) with the stock price.
IBEX has successfully turned earnings per share from a loss to a profit over the past 12 months.
Earnings per share growth rates are not particularly useful for comparing with stock price, when a company has gone from loss to profit. But we can find different measures more enlightening.
IBEX revenue actually increased 9.9% over last year. Since the fundamentals do not easily explain the stock price drop, there could be an opportunity if the market has overreacted.
The graph below illustrates the evolution of income and income over time (reveal the exact values by clicking on the image).
We know that IBEX has recently improved its results, but what does the future hold? We therefore recommend that you consult this free report showing consensus forecast
A different perspective
Given that the broader market is down 18% over the year, the fact that IBEX shareholders are down 11% isn’t too bad. The falls continued into the last quarter, with the stock price falling 5.8% during this period. Momentum traders typically avoid a stock if the stock price is in a downtrend. We prefer to keep an eye on trends in business metrics such as revenue or EPS. It is always interesting to follow the evolution of the share price over the long term. But to better understand IBEX, we need to consider many other factors. Take for example the ubiquitous specter of investment risk. We have identified 1 warning sign with IBEX and understanding them should be part of your investment process.
But note: IBEX may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.