Did Perma-Pipe International Holdings's (NASDAQ:PPIH) Share Price Deserve to Gain 32%?

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Buying a low-cost index fund will get you the average market return. But across the board there are plenty of stocks that underperform the market. For example, the Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH) share price return of 32% over three years lags the market return in the same period. Zooming in, the stock is actually down 3.9% in the last year.

View our latest analysis for Perma-Pipe International Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Perma-Pipe International Holdings has made a profit in the past. However, it made a loss in the last twelve months, suggesting profit may be an unreliable metric at this stage. So we might find other metrics can better explain the share price movements.

We severely doubt anyone is particularly impressed with the modest 0.7% three-year revenue growth rate. While we don't have an obvious theory to explain the share price rise, a closer look at the data might be enlightening.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Investors in Perma-Pipe International Holdings had a tough year, with a total loss of 3.9%, against a market gain of about 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2.6% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before spending more time on Perma-Pipe International Holdings it might be wise to click here to see if insiders have been buying or selling shares.

We will like Perma-Pipe International Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.