Did Changing Sentiment Drive Great Panther Mining’s (TSE:GPR) Share Price Down A Worrying 66%?

Great Panther Mining Limited (TSE:GPR) shareholders should be happy to see the share price up 21% in the last month. Meanwhile over the last three years the stock has dropped hard. Regrettably, the share price slid 66% in that period. So it’s good to see it climbing back up. Perhaps the company has turned over a new leaf.

Check out our latest analysis for Great Panther Mining

Great Panther Mining isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over three years, Great Panther Mining grew revenue at 20% per year. That’s well above most other pre-profit companies. In contrast, the share price is down 30% compound, over three years – disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

TSX:GPR Income Statement, January 31st 2020
TSX:GPR Income Statement, January 31st 2020

It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling Great Panther Mining stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Investors in Great Panther Mining had a tough year, with a total loss of 22%, against a market gain of about 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.5% over the last half decade. We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality business. 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. Be aware that Great Panther Mining is showing 2 warning signs in our investment analysis , you should know about…

Great Panther Mining is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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