WOOF earnings have declined over year, contributing to shareholders 50% loss

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The nature of investing is that you win some, and you lose some. And there's no doubt that Petco Health and Wellness Company, Inc. ( $Petco Health and Wellness Company, Inc.(WOOF)$ ) stock has had a really bad year. The share price is down a hefty 50% in that time. Because Petco Health and Wellness Company hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 18% in the last three months.

While the last year has been tough for Petco Health and Wellness Company shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

Unhappily, Petco Health and Wellness Company had to report a 45% decline in EPS over the last year. This proportional reduction in earnings per share isn't far from the 50% decrease in the share price. Therefore one could posit that the market has not become more concerned about the company, despite the lower EPS. Rather, the share price is remains a similar multiple of the EPS, suggesting the outlook remains the same.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth

NasdaqGS:WOOF Earnings Per Share Growth May 3rd 2023

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Dive deeper into the earnings by checking this interactive graph of Petco Health and Wellness Company's earnings, revenue and cash flow.

A Different Perspective

We doubt Petco Health and Wellness Company shareholders are happy with the loss of 50% over twelve months. That falls short of the market, which lost 2.6%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 18% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term

source: simplywall