Take-Two Interactive Software (NASDAQ:TTWO) adds US$1.3b to market cap in the past 7 days, though investors from a year ago are still down 28%

Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Take-Two Interactive Software, Inc. (NASDAQ:TTWO) have tasted that bitter downside in the last year, as the share price dropped 28%. That’s well below the market decline of 7.7%. At least the damage isn’t so bad if you look at the last three years, since the stock is down 8.3% in that time. On the other hand, we note it’s up 9.7% in about a month. But this could be related to good market conditions, with stocks up around 7.3% during the period.

While the stock has risen 7.2% in the past week but long term shareholders are still in the red, let’s see what the fundamentals can tell us.

See our latest analysis for Take-Two Interactive Software

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Take-Two Interactive Software fell to a loss making position during the year. Some investors no doubt dumped the stock as a result. Of course, if the company can turn the situation around, investors will likely profit.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It’s probably worth noting that the CEO is paid less than the median at similar sized 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. It might be well worth taking a look at our free report on Take-Two Interactive Software’s earnings, revenue and cash flow.

A Different Perspective

We regret to report that Take-Two Interactive Software shareholders are down 28% for the year. Unfortunately, that’s worse than the broader market decline of 7.7%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualized loss of 1.2% over the last half decade. Generally speaking long term share price weakness can be a bad sign, although contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Take-Two Interactive Software better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we’ve spotted with Take-Two Interactive Software.

But note: Take-Two Interactive Software 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.

What are the risks and opportunities for Take-Two Interactive Software?

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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 into account 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.