Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of nLIGHT, Inc. (NASDAQ:LASR) have suffered share price declines over the last year. The share price has slid 59% in that time. nLIGHT may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 33% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
We don't think that nLIGHT's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
nLIGHT grew its revenue by 11% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Without profits, and with revenue growth sluggish, you get a 59% loss for shareholders, over the year. Like many holders, we really want to see better revenue growth in companies that lose money. When a stock falls hard like this, it can signal an over-reaction. Our preference is to wait for a fundamental improvements before buying, but now could be a good time for some research.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
nLIGHT is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling nLIGHT stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
While nLIGHT shareholders are down 59% for the year, the market itself is up 0.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 33% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.