Yahoo Finance Investors three-year losses continue as Gilat Satellite Networks (NASDAQ:GILT) dips a further 12% this week, earnings continue to decline
If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Gilat Satellite Networks Ltd. (NASDAQ:GILT) have had an unfortunate run in the last three years. Unfortunately, they have held through a 55% decline in the share price in that time. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days.
If the past week is anything to go by, investor sentiment for Gilat Satellite Networks isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
See our latest analysis for Gilat Satellite Networks
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. 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.
Gilat Satellite Networks saw its EPS decline at a compound rate of 19% per year, over the last three years. The share price decline of 23% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. The less favorable sentiment is reflected in its current P/E ratio of 11.46.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Gilat Satellite Networks' earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Gilat Satellite Networks shareholders are down 19% for the year, but the market itself is up 26%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 example, we've discovered 1 warning sign for Gilat Satellite Networks that you should be aware of before investing here.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
