Cinedigm (NASDAQ:CIDM shareholders incur further losses as stock declines 13% this week, taking one-year losses to 70%

The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Cinedigm Corp. (NASDAQ:CIDM) shareholder over the last year, since the stock price plummeted 70% in that time. That'd be enough to make even the strongest stomachs churn. Even if you look out three years, the returns are still disappointing, with the share price down40% in that time. The falls have accelerated recently, with the share price down 19% in the last three months. But this could be related to the weak market, which is down 8.4% in the same period.

If the past week is anything to go by, investor sentiment for Cinedigm isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Cinedigm

Cinedigm wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 twelve months, Cinedigm increased its revenue by 35%. That's definitely a respectable growth rate. However, it seems like the market wanted more, since the share price is down 70%. One fear might be that the company might be losing too much money and will need to raise more. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

Take a more thorough look at Cinedigm's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 21% in the twelve months, Cinedigm shareholders did even worse, losing 70%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Cinedigm better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Cinedigm .

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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