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For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Revlon, Inc. (NYSE:REV) shareholders have had that experience, with the share price dropping 40% in three years, versus a market return of about 47%. Even worse, it's down 16% in about a month, which isn't fun at all.
Revlon isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last three years, Revlon saw its revenue grow by 9.5% per year, compound. That's a pretty good rate of top-line growth. Shareholders have seen the share price fall at 16% per year, for three years. So the market has definitely lost some love for the stock. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Revlon's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Revlon shareholders have received a total shareholder return of 16% over the last year. That certainly beats the loss of about 7.7% per year over the last half decade. 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. 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.
But note: Revlon may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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 firstname.lastname@example.org. 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.