Inari Medical's (NASDAQ:NARI) earnings have declined over year, contributing to shareholders 30% loss
It's easy to match the overall market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Unfortunately the Inari Medical, Inc. (NASDAQ:NARI) share price slid 30% over twelve months. That contrasts poorly with the market return of 9.6%. Inari Medical may have better days ahead, of course; we've only looked at a one year period. More recently, the share price has dropped a further 25% in a month.
The recent uptick of 8.3% could be a positive sign of things to come, so let's take a lot at historical fundamentals.
See our latest analysis for Inari Medical
We don't think that Inari Medical's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Inari Medical grew its revenue by 118% over the last year. That's a strong result which is better than most other loss making companies. The share price drop of 30% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. If you are thinking of buying or selling Inari Medical stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Given that the market gained 9.6% in the last year, Inari Medical shareholders might be miffed that they lost 30%. 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 22%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for Inari Medical you should be aware of, and 1 of them can't be ignored.
Of course Inari Medical may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
