Key Energy Services, Inc. (NYSE:KEG) shareholders will doubtless be very grateful to see the share price up 65% in the last quarter. But that isn't much consolation for the painful drop we've seen in the last year. Indeed, the share price is down a whopping 74% in the last year. It's not uncommon to see a bounce after a drop like that. Only time will tell if the company can sustain the turnaround.
Key Energy Services isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Key Energy Services grew its revenue by 20% over the last year. That's definitely a respectable growth rate. Unfortunately, the market wanted something better, given it sent the share price 74% lower during the year. It could be that the losses are too much for investors to handle without losing their nerve. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
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 Key Energy Services shareholders are down 74% for the year, the market itself is up 9.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 65% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
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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