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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the NCR Corporation (NYSE:NCR) share price is down 34% in the last year. That falls noticeably short of the market decline of around 16%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 4.1% in three years. Shareholders have had an even rougher run lately, with the share price down 29% in the last 90 days. But this could be related to the weak market, which is down 13% in the same period.
After losing 6.5% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
We don't think that NCR's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last year NCR saw its revenue grow by 20%. We think that is pretty nice growth. Meanwhile, the share price is down 34% over twelve months, which is disappointing given the progress made. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We know that NCR has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think NCR will earn in the future (free profit forecasts).
A Different Perspective
While the broader market lost about 16% in the twelve months, NCR shareholders did even worse, losing 34%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For instance, we've identified 3 warning signs for NCR (1 is potentially serious) that you should be aware of.
We will like NCR better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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