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Further weakness as SelectQuote (NYSE:SLQT) drops 10% this week, taking one-year losses to 65%

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The nature of investing is that you win some, and you lose some. And unfortunately for SelectQuote, Inc. (NYSE:SLQT) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 65%. SelectQuote may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 36% in the last three months.

If the past week is anything to go by, investor sentiment for SelectQuote isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for SelectQuote

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. 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).

SelectQuote managed to increase earnings per share from a loss to a profit, over the last 12 months.

Earnings per share growth rates aren't particularly useful for comparing with the share price, when a company has moved from loss to profit. But we may find different metrics more enlightening.

SelectQuote's revenue is actually up 65% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Given that the market gained 15% in the last year, SelectQuote shareholders might be miffed that they lost 65%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 36%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand SelectQuote better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for SelectQuote (of which 2 are concerning!) you should know about.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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.

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