It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So spare a thought for the long term shareholders of Amneal Pharmaceuticals, Inc. (NYSE:AMRX); the share price is down a whopping 74% in the last three years. That'd be enough to cause even the strongest minds some disquiet. Unfortunately the share price momentum is still quite negative, with prices down 15% in thirty days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
If the past week is anything to go by, investor sentiment for Amneal Pharmaceuticals isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Amneal Pharmaceuticals saw its EPS decline at a compound rate of 66% per year, over the last three years. This fall in the EPS is worse than the 36% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. This positive sentiment is also reflected in the generous P/E ratio of 103.00.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into Amneal Pharmaceuticals' key metrics by checking this interactive graph of Amneal Pharmaceuticals's earnings, revenue and cash flow.
A Different Perspective
Amneal Pharmaceuticals shareholders are up 16% for the year. It's always nice to make money but this return falls short of the market return which was about 31% for the year. The silver lining is that the recent rise is far preferable to the annual loss of 20% that shareholders have suffered over the last three years. We hope the turnaround in fortunes continues. 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 instance, we've identified 3 warning signs for Amneal Pharmaceuticals (1 is concerning) that you should be aware of.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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