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It is doubtless a positive to see that the Motorcar Parts of America, Inc. (NASDAQ:MPAA) share price has gained some 38% in the last three months. But if you look at the last five years the returns have not been good. After all, the share price is down 49% in that time, significantly under-performing the market.
Motorcar Parts of America isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last half decade, Motorcar Parts of America saw its revenue increase by 9.5% per year. That's a pretty good rate for a long time period. Shareholders have seen the share price fall at 8.2% per year, for five years: a poor performance. Clearly, the expectations from back then have not been satisfied. There is always a big risk of losing money yourself when you buy shares in a company that loses money.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Motorcar Parts of America's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Motorcar Parts of America shareholders gained a total return of 0.7% during the year. Unfortunately this falls short of the market return. But at least that's still a gain! Over five years the TSR has been a reduction of 8.2% per year, over five years. It could well be that the business is stabilizing. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Motorcar Parts of America (including 1 which is is a bit unpleasant) .
But note: Motorcar Parts of America may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. 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.
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