Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Whole Earth Brands, Inc. (NASDAQ:FREE) stock has had a really bad year. The share price has slid 68% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 63% in the last three years. The falls have accelerated recently, with the share price down 42% in the last three months.
After losing 14% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Whole Earth Brands managed to increase earnings per share from a loss to a profit, over the last 12 months.
We're surprised that the share price is lower given that improvement. If the company can sustain the earnings growth, this might be an inflection point for the business, which would make right now a really interesting time to study it more closely.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Whole Earth Brands has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Whole Earth Brands will grow revenue in the future.
A Different Perspective
Whole Earth Brands shareholders are down 68% for the year, falling short of the market return. The market shed around 19%, no doubt weighing on the stock price. The three-year loss of 18% 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. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. To that end, you should learn about the 4 warning signs we've spotted with Whole Earth Brands (including 1 which is a bit unpleasant) .
Of course Whole Earth Brands 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 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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