Shareholders in Alignment Healthcare (NASDAQ:ALHC) are in the red if they invested a year ago
Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Alignment Healthcare, Inc. (NASDAQ:ALHC) have suffered share price declines over the last year. The share price has slid 61% in that time. We wouldn't rush to judgement on Alignment Healthcare because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 24% in the last 90 days.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
See our latest analysis for Alignment Healthcare
Because Alignment Healthcare made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Alignment Healthcare grew its revenue by 23% over the last year. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 61% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Alignment Healthcare stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Given that the market gained 12% in the last year, Alignment Healthcare shareholders might be miffed that they lost 61%. 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 24%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. For instance, we've identified 1 warning sign for Alignment Healthcare that you should be aware of.
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 American 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.
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