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Did You Manage To Avoid Century Aluminum's (NASDAQ:CENX) Painful 52% Share Price Drop?

Simply Wall St

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Century Aluminum Company (NASDAQ:CENX) shareholders should be happy to see the share price up 21% in the last quarter. But that isn't much consolation to those who have suffered through the declines of the last year. Specifically, the stock price slipped by 52% in that time. The share price recovery is not so impressive when you consider the fall. Of course, it could be that the fall was overdone.

See our latest analysis for Century Aluminum

Century Aluminum isn't a profitable company, so 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Century Aluminum grew its revenue by 19% over the last year. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 52% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

NasdaqGS:CENX Income Statement, March 26th 2019

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Century Aluminum stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Investors in Century Aluminum had a tough year, with a total loss of 52%, against a market gain of about 6.3%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9.0% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

Century Aluminum is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.

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 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. Thank you for reading.