Leaf Mobile (TSE:EAGR) shareholders have endured a 54% loss from investing in the stock a year ago

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Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Leaf Mobile Inc. (TSE:EAGR) have suffered share price declines over the last year. In that relatively short period, the share price has plunged 54%. Because Leaf Mobile hasn’t been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 49% in the last 90 days.

It’s worthwhile assessing if the company’s economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let’s do just that.

See our latest analysis for Leaf Mobile

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Leaf Mobile fell to a loss making position during the year. While this may prove temporary, we’d consider it a negative, so it doesn’t surprise us that the stock price is down. Of course, if the company can turn the situation around, investors will likely profit.

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

It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Leaf Mobile’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

While Leaf Mobile shareholders are down 54% for the year, the market itself is up 11%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 49%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. 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. Take risks, for example – Leaf Mobile has 2 warning signs we think you should be aware of.

Leaf Mobile is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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