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Did Changing Sentiment Drive Art's-Way Manufacturing's (NASDAQ:ARTW) Share Price Down A Worrying 64%?

Simply Wall St

We think intelligent long term investing is the way to go. But no-one is immune from buying too high. For example the Art's-Way Manufacturing Co., Inc. (NASDAQ:ARTW) share price dropped 64% over five years. That's an unpleasant experience for long term holders. Furthermore, it's down 16% in about a quarter. That's not much fun for holders.

Check out our latest analysis for Art's-Way Manufacturing

Art's-Way Manufacturing 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. 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 five years Art's-Way Manufacturing saw its revenue shrink by 14% per year. That's definitely a weaker result than most pre-profit companies report. It seems appropriate, then, that the share price slid about 19% annually during that time. We don't generally like to own companies that lose money and don't grow revenues. You might be better off spending your money on a leisure activity. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NasdaqCM:ARTW Income Statement, December 24th 2019

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 worthwhile taking a look at our free report on Art's-Way Manufacturing's earnings, revenue and cash flow.

A Different Perspective

Investors in Art's-Way Manufacturing had a tough year, with a total loss of 13%, against a market gain of about 40%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. However, the loss over the last year isn't as bad as the 19% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

We will like Art's-Way Manufacturing 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.