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Did Changing Sentiment Drive Clearwater Paper's (NYSE:CLW) Share Price Down A Worrying 64%?

Generally speaking long term investing is the way to go. But unfortunately, some companies simply don't succeed. To wit, the Clearwater Paper Corporation (NYSE:CLW) share price managed to fall 64% over five long years. That's an unpleasant experience for long term holders. The falls have accelerated recently, with the share price down 20% in the last three months. Of course, this share price action may well have been influenced by the 13% decline in the broader market, throughout the period.

Check out our latest analysis for Clearwater Paper

Clearwater Paper isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 five years Clearwater Paper saw its revenue shrink by 1.6% per year. That's not what investors generally want to see. With neither profit nor revenue growth, the loss of 18% per year doesn't really surprise us. We don't think anyone is rushing to buy this stock. Not that many investors like to invest in companies that are losing money and not growing revenue.

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

NYSE:CLW Income Statement April 28th 2020
NYSE:CLW Income Statement April 28th 2020

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

We're pleased to report that Clearwater Paper shareholders have received a total shareholder return of 13% over one year. Notably the five-year annualised TSR loss of 18% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Clearwater Paper better, we need to consider many other factors. Take risks, for example - Clearwater Paper has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Of course Clearwater Paper may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.

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