iTeos Therapeutics (NASDAQ:ITOS) shareholders have endured a 46% loss from investing in the stock a year ago

The simplest way to benefit from a rising market is to buy an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Investors in iTeos Therapeutics, Inc. (NASDAQ:ITOS) have tasted that bitter downside in the last year, as the share price dropped 46%. That's disappointing when you consider the market declined 2.5%. We wouldn't rush to judgement on iTeos Therapeutics because we don't have a long term history to look at. Furthermore, it's down 32% in about a quarter. That's not much fun for holders.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for iTeos Therapeutics

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.

Unhappily, iTeos Therapeutics had to report a 55% decline in EPS over the last year. The share price fall of 46% isn't as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn't more difficult.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It is of course excellent to see how iTeos Therapeutics has grown profits over the years, but the future is more important for shareholders. This free interactive report on iTeos Therapeutics' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We doubt iTeos Therapeutics shareholders are happy with the loss of 46% over twelve months. That falls short of the market, which lost 2.5%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 32% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand iTeos Therapeutics better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for iTeos Therapeutics you should be aware of, and 1 of them is significant.

We will like iTeos Therapeutics 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 American 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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