Shareholders in Select Energy Services (NYSE:WTTR) have lost 55%, as stock drops 9.9% this past week

Generally speaking long term investing is the way to go. But no-one is immune from buying too high. For example, after five long years the Select Energy Services, Inc. (NYSE:WTTR) share price is a whole 55% lower. That's not a lot of fun for true believers. Shareholders have had an even rougher run lately, with the share price down 11% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

Since Select Energy Services has shed US$73m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Select Energy Services

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

Select Energy Services became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics may better explain the share price move.

It could be that the revenue decline of 3.8% per year is viewed as evidence that Select Energy Services is shrinking. This has probably encouraged some shareholders to sell down the stock.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We know that Select Energy Services has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Select Energy Services will earn in the future (free profit forecasts).

A Different Perspective

It's nice to see that Select Energy Services shareholders have received a total shareholder return of 25% over the last year. Notably the five-year annualised TSR loss of 9% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Select Energy Services has 2 warning signs we think you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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