Dawson Geophysical Company (NASDAQ:DWSN) shareholders should be happy to see the share price up 17% in the last quarter. But over the last three years we’ve seen a quite serious decline. In that time, the share price dropped 67%. Some might say the recent bounce is to be expected after such a bad drop. After all, could be that the fall was overdone.
Given that Dawson Geophysical didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over three years, Dawson Geophysical grew revenue at 1.9% per year. Given it’s losing money in pursuit of growth, we are not really impressed with that. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 31% during the period. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn’t easy, and the process will not always be smooth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Dawson Geophysical’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Dawson Geophysical shareholders are down 26% for the year, but the market itself is up 31%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 18% 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. It’s always interesting to track share price performance over the longer term. But to understand Dawson Geophysical better, we need to consider many other factors. For example, we’ve discovered 2 warning signs for Dawson Geophysical which any shareholder or potential investor should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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