Cincinnati Bell Inc. (NYSE:CBB) shareholders will doubtless be very grateful to see the share price up 38% in the last month. But over the last three years we’ve seen a quite serious decline. Regrettably, the share price slid 65% in that period. So it is really good to see an improvement. After all, could be that the fall was overdone.
Because Cincinnati Bell is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
Over three years, Cincinnati Bell grew revenue at 13% per year. That’s a fairly respectable growth rate. That contrasts with the weak share price, which has fallen 30% compounded, over three years. To be frank we’re surprised to see revenue growth and share price growth diverge so strongly. So this is one stock that might be worth investigating further, or even adding to your watchlist.
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. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Cincinnati Bell in this interactive graph of future profit estimates.
A Different Perspective
Investors in Cincinnati Bell had a tough year, with a total loss of 19%, against a market gain of about 24%. 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 14% 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 businesses. 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 example, we’ve discovered 3 warning signs for Cincinnati Bell (of which 1 is major) which any shareholder or potential investor should be aware of.
Cincinnati Bell 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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.