Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Genesis Healthcare, Inc. (NYSE:GEN) stock has had a really bad year. In that relatively short period, the share price has plunged 55%. However, the longer term returns haven't been so bad, with the stock down 27% in the last three years. The falls have accelerated recently, with the share price down 15% in the last three months.
Genesis Healthcare 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year Genesis Healthcare saw its revenue fall by 8.5%. That looks pretty grim, at a glance. The share price drop of 55% is understandable given the company doesn't have profits to boast of. Fingers crossed this is the low ebb for the stock. We have a natural aversion to companies that are losing money and shrinking revenue. But perhaps that is being too careful.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
This free interactive report on Genesis Healthcare's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Genesis Healthcare shareholders are down 55% for the year, but the broader market is up 4.6%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 9.9% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. If you would like to research Genesis Healthcare in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
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.