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Imagine Owning Exterran (NYSE:EXTN) While The Price Tanked 54%

Simply Wall St

Exterran Corporation (NYSE:EXTN) shareholders should be happy to see the share price up 10% in the last month. But that's not enough to compensate for the decline over the last twelve months. Specifically, the stock price slipped by 54% in that time. It's not that amazing to see a bounce after a drop like that. You could argue that the sell-off was too severe.

View our latest analysis for Exterran

Given that Exterran didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Exterran grew its revenue by 4.7% over the last year. That's not a very high growth rate considering it doesn't make profits. It's likely this muted growth has contributed to the share price decline of 54% in the last year. Like many holders, we really want to see better revenue growth in companies that lose money. When a stock falls hard like this, it can signal an over-reaction. Our preference is to wait for a fundamental improvements before buying, but now could be a good time for some research.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NYSE:EXTN Income Statement, October 7th 2019

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Exterran shareholders are down 54% for the year, but the broader market is up 3.7%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 9.8% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Before spending more time on Exterran it might be wise to click here to see if insiders have been buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.