Should RealReal (NASDAQ:REAL) Be Disappointed With Their 31% Profit?
While The RealReal, Inc. (NASDAQ:REAL) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 24% in the last quarter. Taking a longer term view we see the stock is up over one year. In that time, it is up 31%, which isn't bad, but is below the market return of 41%.
See our latest analysis for RealReal
RealReal wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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 year RealReal saw its revenue shrink by 0.9%. Given the revenue reduction the modest 31% share price rise over the year seems pretty decent. Generally we're pretty unenthusiastic about loss making stocks that are not growing revenue.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
RealReal is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling RealReal stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
We're happy to report that RealReal are up 31% over the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 41%. Unfortunately the share price is down 24% over the last quarter. It may simply be that the share price got ahead of itself, and its quite possible it will keep moving in the right direction, especially if the business continues to deliver good financial results. 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. Consider risks, for instance. Every company has them, and we've spotted 4 warning signs for RealReal you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
