Investing in stocks comes with the risk that the share price will fall. And unfortunately for Pinterest, Inc. (NYSE:PINS) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 69% in that time. At least the damage isn’t so bad if you look at the last three years, since the stock is down 30% in that time. Furthermore, it’s down 16% in about a quarter. That’s not much fun for holders.
Given the past week has been tough on shareholders, let’s investigate the fundamentals and see what we can learn.
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 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 last year Pinterest grew its earnings per share, moving from a loss to a profit.
Earnings per share growth rates aren’t particularly useful for comparing with the share price, when a company has moved from loss to profit. So it makes sense to check out some other factors.
Pinterest’s revenue is actually up 40% over the last year. Since we can’t easily explain the share price movement based on these metrics, it might be worth considering how market sentiment has changed towards the stock.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
The last twelve months weren’t great for Pinterest shares, which performed worse than the market, costing holders 69%. The market shed around 11%, no doubt weighing on the stock price. Shareholders have lost 9% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to “buy when there’s blood in the streets, even if the blood is your own”, he also focusses on high quality stocks with solid prospects. 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. Consider risks, for instance. Every company has them, and we’ve spotted 3 warning signs for Pinterest you should know about.
But note: Pinterest may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.