Calavo Growers (NASDAQ: CVGW) earnings and shareholder returns have trended downward for the past three years, but the stock rose 8.2% last week

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If you build a properly diversified equity portfolio, chances are some of your choices will perform poorly. Long term The producers of Calavo, Inc. Shareholders (NASDAQ: CVGW) know this too well, since the share price has fallen considerably over three years. They could therefore be moved by the stock price collapse of 59% at this time. And in the past year the share price has fallen 41%, so we doubt many shareholders are thrilled. Shareholders have had an even tougher time lately, with the stock price falling 38% in the past 90 days. This could be related to recent financial results – you can find out about the most recent data by reading our company report.

As the stock rose 8.2% last week but long-term shareholders are still in the red, let’s see what the fundamentals can tell us.

While the markets are a powerful pricing mechanism, stock prices reflect investor sentiment, not just the underlying performance of the company. By comparing earnings per share (EPS) and changes in the share price over time, we can get a sense of how investors’ attitudes towards a company have changed over time.

Calavo Growers has become profitable over the past five years. This would generally be viewed as positive, so we’re surprised to see that the stock price is going down. It is therefore worth looking at other metrics to try to understand the evolution of the share price.

We believe that the decline in revenue over three years, at a rate of 3.0% per year, has probably caused some shareholders to want to sell. After all, if revenues continue to decline, it can be difficult to find profit growth in the future.

You can see how income and income have changed over time in the image below (click on the graph to see the exact values).

NasdaqGS: CVGW Earnings and Revenue Growth September 24, 2021

It’s good to see that there have been some significant insider buys over the past three months. It’s positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Calavo Growers stock, you should check this out free report showing analysts’ earnings forecasts.

A different perspective

Calavo Growers shareholders are down 40% on the year (including dividends), but the market itself is up 39%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance crowns a poor run, with shareholders facing a total loss of 6% per year over five years. We are aware that Baron Rothschild has said that investors should “buy when there is blood in the streets”, but we caution that investors must first ensure that they are buying a high quality business. It is always interesting to follow the evolution of stock prices over the long term. But to better understand Calavo Growers, there are many other factors that we need to take into account. Concrete example: we have spotted 3 warning signs for Calavo producers you must be aware.

If you like to buy stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on US stock exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.

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