Semler Scientific (NASDAQ:SMLR) shareholders have endured a 81% loss from investing in the stock three years ago
As an investor, mistakes are inevitable. But really bad investments should be rare. So take a moment to sympathize with the long term shareholders of Semler Scientific, Inc. (NASDAQ:SMLR), who have seen the share price tank a massive 81% over a three year period. That might cause some serious doubts about the merits of the initial decision to buy the stock, to put it mildly. Shareholders have had an even rougher run lately, with the share price down 27% in the last 90 days. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
With that in mind, it’s worth seeing if the company’s underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Semler Scientific
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.
Semler Scientific saw its EPS decline at a compound rate of 12% per year, over the last three years. The share price decline of 43% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past. The less favorable sentiment is reflected in its current P/E ratio of 10.51.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
This free interactive report on Semler Scientific’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Semler Scientific shareholders are down 7.4% for the year, but the market itself is up 34%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. However, the loss over the last year isn’t as bad as the 7% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It’s always interesting to track share price performance over the longer term. But to understand Semler Scientific better, we need to consider many other factors. Take risks, for example – Semler Scientific has 2 warning signs (and 1 which shouldn’t be ignored) we think you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.