Unfortunately for some shareholders, the ProSight Global (NYSE:PROS) share price has dived 35% in the last thirty days. The bad news is that the recent drop obliterated the last year’s worth of gains; the stock is flat over twelve months.

Assuming nothing else has changed, a lower share price makes a stock more attractive to potential buyers. While the market sentiment towards a stock is very changeable, in the long run, the share price will tend to move in the same direction as earnings per share. So, on certain occasions, long term focussed investors try to take advantage of pessimistic expectations to buy shares at a better price. One way to gauge market expectations of a stock is to look at its Price to Earnings Ratio

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