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There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But if when you choose to buy stocks, some of them will be below average performers. For example, the Copa Holdings, S.A. (NYSE:CPA), share price is up over the last year, but its gain of 33% trails the market return. Zooming out, the stock is actually down 2.5% in the last three years.
Since it's been a strong week for Copa Holdings shareholders, let's have a look at trend of the longer term fundamentals.
Copa Holdings 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Copa Holdings actually shrunk its revenue over the last year, with a reduction of 66%. The lacklustre gain of 33% over twelve months, is not a bad result given the falling revenue. Generally we're pretty unenthusiastic about loss making stocks that are not growing revenue.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Copa Holdings is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
Copa Holdings shareholders have received returns of 33% over twelve months, which isn't far from the general market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 0.5%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for Copa Holdings. It's always interesting to track share price performance over the longer term. But to understand Copa Holdings better, we need to consider many other factors. For instance, we've identified 1 warning sign for Copa Holdings that you should be aware of.
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.
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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