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Did You Manage To Avoid PlayAGS's (NYSE:AGS) Painful 64% Share Price Drop?

Simply Wall St

Even the best stock pickers will make plenty of bad investments. And unfortunately for PlayAGS, Inc. (NYSE:AGS) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 64% in that time. We wouldn't rush to judgement on PlayAGS because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 49% in the last 90 days.

Check out our latest analysis for PlayAGS

PlayAGS 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 twelve months, PlayAGS increased its revenue by 17%. That's definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 64% 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. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.

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

NYSE:AGS Income Statement, October 7th 2019

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

While PlayAGS shareholders are down 64% for the year, the market itself is up 3.7%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 49%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of PlayAGS by clicking this link.

PlayAGS 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.