Yahoo Finance Further weakness as Kaiser Aluminum (NASDAQ:KALU) drops 8.2% this week, taking one-year losses to 31%
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the Kaiser Aluminum Corporation (NASDAQ:KALU) share price is down 33% in the last year. That falls noticeably short of the market decline of around 9.8%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 1.5% in three years. The last week also saw the share price slip down another 8.2%. However, this move may have been influenced by the broader market, which fell 5.6% in that time.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
See our latest analysis for Kaiser Aluminum
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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the last year Kaiser Aluminum saw its earnings per share drop below zero. While this may prove temporary, we'd consider it a negative, so it doesn't surprise us that the stock price is down. Of course, if the company can turn the situation around, investors will likely profit.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into Kaiser Aluminum's key metrics by checking this interactive graph of Kaiser Aluminum's earnings, revenue and cash flow.
A Different Perspective
We regret to report that Kaiser Aluminum shareholders are down 31% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 9.8%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 5%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Kaiser Aluminum better, we need to consider many other factors. Even so, be aware that Kaiser Aluminum is showing 3 warning signs in our investment analysis , and 2 of those make us uncomfortable...
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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.
