Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
We think intelligent long term investing is the way to go. But unfortunately, some companies simply don’t succeed. For example the Unico American Corporation (NASDAQ:UNAM) share price dropped 53% over five years. That’s not a lot of fun for true believers. We also note that the stock has performed poorly over the last year, with the share price down 24%. And the share price decline continued over the last week, dropping some 5.7%.
Given that Unico American 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. 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.
In the last half decade, Unico American saw its revenue increase by 3.2% per year. That’s not a very high growth rate considering it doesn’t make profits. It’s likely this weak growth has contributed to an annualised return of 14% for the last five years. We’d want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Unico American. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term).
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
If you are thinking of buying or selling Unico American stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While the broader market gained around 3.2% in the last year, Unico American shareholders lost 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 14% per year over five years. 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. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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 US exchanges.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.