Shareholders in Brilliant Earth Group (NASDAQ:BRLT) are in the red if they invested a year ago

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Brilliant Earth Group, Inc. (NASDAQ:BRLT) share price is down 41% in the last year. That falls noticeably short of the market decline of around 9.4%. Brilliant Earth Group may have better days ahead, of course; we've only looked at a one year period.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

View our latest analysis for Brilliant Earth Group

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.

Brilliant Earth Group managed to increase earnings per share from a loss to a profit, over the last 12 months.

We're surprised that the share price is lower given that improvement. If the improved profitability is a sign of things to come, then right now may prove the perfect time to pop this stock on your watchlist.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Brilliant Earth Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

Brilliant Earth Group shareholders are down 41% for the year, even worse than the market loss of 9.4%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 2.5% 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. 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. Even so, be aware that Brilliant Earth Group is showing 1 warning sign in our investment analysis , you should know about...

But note: Brilliant Earth Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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