The truth is that if you invest for long enough, you're going to end up with some losing stocks. But long term Adient plc (NYSE:ADNT) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 70% in that time. The falls have accelerated recently, with the share price down 14% in the last three months.
Because Adient made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last three years, Adient saw its revenue grow by 1.1% per year, compound. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 33% for the last three years. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). Keep in mind it isn't unusual for good businesses to have a tough time or a couple of uninspiring years.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Adient is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Adient stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Over the last year Adient shareholders have received a TSR of 0.5%. Unfortunately this falls short of the market return of around 24%. The silver lining is that the recent rise is far preferable to the annual loss of 32% that shareholders have suffered over the last three years. It could well be that the business is stabilizing. 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 - Adient has 1 warning sign we think you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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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