Cumulus Media (NASDAQ:CMLS) shareholders have endured a 57% loss from investing in the stock three years ago
If you love investing in stocks you're bound to buy some losers. Long term Cumulus Media Inc. (NASDAQ:CMLS) shareholders know that all too well, since the share price is down considerably over three years. Unfortunately, they have held through a 57% decline in the share price in that time. And over the last year the share price fell 37%, so we doubt many shareholders are delighted.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Cumulus Media
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.
Cumulus Media became profitable within the last five years. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.
We think that the revenue decline over three years, at a rate of 5.3% per year, probably had some shareholders looking to sell. After all, if revenue keeps shrinking, it may be difficult to find earnings growth in the future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that Cumulus Media has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Cumulus Media stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
The last twelve months weren't great for Cumulus Media shares, which performed worse than the market, costing holders 37%. The market shed around 16%, no doubt weighing on the stock price. The three-year loss of 16% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. Take risks, for example - Cumulus Media has 1 warning sign we think you should be aware of.
We will like Cumulus Media better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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