It's nice to see the Nuvectra Corporation (NASDAQ:NVTR) share price up 27% in a week. But that doesn't change the fact that the returns over the last year have been stomach churning. To wit, the stock has dropped 91% over the last year. So it's not that amazing to see a bit of a bounce. The real question is whether the company can turn around its fortunes.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Nuvectra isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last twelve months, Nuvectra increased its revenue by 40%. That's definitely a respectable growth rate. Unfortunately, the market wanted something better, given it sent the share price 91% lower during the year. One fear might be that the company might be losing too much money and will need to raise more. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.
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. You can see what analysts are predicting for Nuvectra in this interactive graph of future profit estimates.
A Different Perspective
The last twelve months weren't great for Nuvectra shares, which cost holders 91%, while the market was up about 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 30% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
Nuvectra is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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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