Earnings are growing at Leslie's (NASDAQ:LESL) but shareholders still don't like its prospects

It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Leslie's, Inc. (NASDAQ:LESL) share price is down 28% in the last year. That's disappointing when you consider the market declined 18%. Leslie's hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time.

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

See our latest analysis for Leslie's

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

Even though the Leslie's 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.

Leslie's' revenue is actually up 14% 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 like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Leslie's in this interactive graph of future profit estimates.

A Different Perspective

We doubt Leslie's shareholders are happy with the loss of 28% over twelve months. That falls short of the market, which lost 18%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. It's great to see a nice little 6.2% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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. To that end, you should be aware of the 3 warning signs we've spotted with Leslie's .

Leslie's 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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