Yahoo Finance The one-year underlying earnings growth at Focus Financial Partners (NASDAQ:FOCS) is promising, but the shareholders are still in the red over that time
The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Focus Financial Partners Inc. (NASDAQ:FOCS) have tasted that bitter downside in the last year, as the share price dropped 37%. That's disappointing when you consider the market declined 20%. Longer term investors have fared much better, since the share price is up 21% in three years. The falls have accelerated recently, with the share price down 30% in the last three months. However, one could argue that the price has been influenced by the general market, which is down 18% in the same timeframe.
If the past week is anything to go by, investor sentiment for Focus Financial Partners isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
View our latest analysis for Focus Financial Partners
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Even though the Focus Financial Partners share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.
It's fair to say that the share price does not seem to be reflecting the EPS growth. So it's well worth checking out some other metrics, too.
Focus Financial Partners' revenue is actually up 37% 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.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
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 it makes a lot of sense to check out what analysts think Focus Financial Partners will earn in the future (free profit forecasts).
A Different Perspective
Focus Financial Partners shareholders are down 37% for the year, falling short of the market return. Meanwhile, the broader market slid about 20%, likely weighing on the stock. Investors are up over three years, booking 7% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand Focus Financial Partners better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Focus Financial Partners you should be aware of, and 1 of them shouldn't be ignored.
Focus Financial Partners is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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.
