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The nature of investing is that you win some, and you lose some. And unfortunately for Veoneer, Inc. (NYSE:VNE) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 59%. Veoneer may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 32% in about a quarter. That's not much fun for holders.
Veoneer 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Veoneer's revenue didn't grow at all in the last year. In fact, it fell 8.8%. That looks pretty grim, at a glance. The share price drop of 59% is understandable given the company doesn't have profits to boast of. Having said that, if growth is coming in the future, the stock may have better days ahead. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
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. So it makes a lot of sense to check out what analysts think Veoneer will earn in the future (free profit forecasts).
A Different Perspective
Given that the market gained 2.9% in the last year, Veoneer shareholders might be miffed that they lost 59%. 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. With the stock down 32% 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. 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 Veoneer by clicking this link.
There are plenty of other companies that have insiders buying up shares. You probably do 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.
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