Green Plains Inc. (NASDAQ:GPRE) shareholders have seen the share price descend 22% over the month. But in three years the returns have been great. In three years the stock price has launched 166% higher: a great result. It's not uncommon to see a share price retrace a bit, after a big gain. Only time will tell if there is still too much optimism currently reflected in the share price.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
Green Plains 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. 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.
In the last 3 years Green Plains saw its revenue grow at 3.8% per year. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In contrast, the stock has popped 39% per year in that time - an impressive result. We'd need to take a closer look at the revenue and profit trends to see whether the improvements might justify that sort of increase. It may be that the market is pretty optimistic about Green Plains if you look to the bottom line.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Green Plains is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Green Plains in this interactive graph of future profit estimates.
A Different Perspective
The total return of 16% received by Green Plains shareholders over the last year isn't far from the market return of -16%. The silver lining is that longer term investors would have made a total return of 8% per year over half a decade. If the fundamental data remains strong, and the share price is simply down on sentiment, then this could be an opportunity worth investigating. It's always interesting to track share price performance over the longer term. But to understand Green Plains better, we need to consider many other factors. For example, we've discovered 2 warning signs for Green Plains that you should be aware of before investing here.
We will like Green Plains 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.
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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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