U.S. Markets closed
  • S&P 500

    4,128.80
    +31.63 (+0.77%)
     
  • Dow 30

    33,800.60
    +297.03 (+0.89%)
     
  • Nasdaq

    13,900.19
    +211.39 (+1.54%)
     
  • Russell 2000

    2,243.47
    +20.42 (+0.92%)
     
  • Crude Oil

    59.34
    -0.26 (-0.44%)
     
  • Gold

    1,744.10
    -14.10 (-0.80%)
     
  • Silver

    25.33
    -0.26 (-1.02%)
     
  • EUR/USD

    1.1905
    +0.0031 (+0.2619%)
     
  • 10-Yr Bond

    1.6660
    +0.0340 (+2.08%)
     
  • Vix

    16.69
    -0.47 (-2.74%)
     
  • GBP/USD

    1.3706
    -0.0032 (-0.2316%)
     
  • USD/JPY

    109.6500
    -0.1800 (-0.1639%)
     
  • BTC-USD

    60,350.86
    +1,907.02 (+3.26%)
     
  • CMC Crypto 200

    1,235.89
    +45.20 (+3.80%)
     
  • FTSE 100

    6,915.75
    +30.43 (+0.44%)
     
  • Nikkei 225

    29,768.06
    +37.26 (+0.13%)
     

Investors Who Bought ARC Document Solutions (NYSE:ARC) Shares Five Years Ago Are Now Down 85%

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
  • Oops!
    Something went wrong.
    Please try again later.

ARC Document Solutions, Inc. (NYSE:ARC) shareholders should be happy to see the share price up 29% in the last month. But that doesn't change the fact that the returns over the last half decade have been stomach churning. Like a ship taking on water, the share price has sunk 85% in that time. While the recent increase might be a green shoot, we're certainly hesitant to rejoice. The million dollar question is whether the company can justify a long term recovery.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

See our latest analysis for ARC Document Solutions

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During five years of share price growth, ARC Document Solutions moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

The revenue decline of 2.0% isn't too bad. But if the market expected durable top line growth, then that could explain the share price weakness.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NYSE:ARC Income Statement, December 30th 2019
NYSE:ARC Income Statement, December 30th 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

Investors in ARC Document Solutions had a tough year, with a total loss of 28%, against a market gain of about 33%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 32% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Before spending more time on ARC Document Solutions it might be wise to click here to see if insiders have been buying or selling shares.

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.

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.

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. Thank you for reading.