XANO Industri's (STO:XANO B) earnings trajectory could turn positive as the stock jumps 11% this past week

Simply Wall St · 10/26 06:21

It's nice to see the XANO Industri AB (publ) (STO:XANO B) share price up 11% in a week. Meanwhile over the last three years the stock has dropped hard. Indeed, the share price is down a tragic 58% in the last three years. Some might say the recent bounce is to be expected after such a bad drop. The rise has some hopeful, but turnarounds are often precarious.

Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.

View our latest analysis for XANO Industri

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 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 three years that the share price fell, XANO Industri's earnings per share (EPS) dropped by 30% each year. In comparison the 25% compound annual share price decline isn't as bad as the EPS drop-off. So the market may not be too worried about the EPS figure, at the moment -- or it may have previously priced some of the drop in.

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
OM:XANO B Earnings Per Share Growth October 26th 2024

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

A Different Perspective

XANO Industri shareholders are down 8.0% for the year (even including dividends), but the market itself is up 34%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 7% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand XANO Industri better, we need to consider many other factors. For instance, we've identified 2 warning signs for XANO Industri that you should be aware of.

We will like XANO Industri better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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