Wagners Holding's (ASX:WGN) Shareholders Are Down 20% On Their Shares

Wagners Holding Company Limited (ASX:WGN) shareholders will doubtless be very grateful to see the share price up 46% in the last quarter. But that doesn't change the fact that the returns over the last year have been less than pleasing. In fact, the price has declined 20% in a year, falling short of the returns you could get by investing in an index fund.

Check out our latest analysis for Wagners Holding

Wagners Holding wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Wagners Holding increased its revenue by 5.4%. That's not a very high growth rate considering it doesn't make profits. Given this lacklustre revenue growth, the share price drop of 20% seems pretty appropriate. It's important not to lose sight of the fact that profitless companies must grow. But if you buy a loss making company then you could become a loss making investor.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Given that the market gained 2.7% in the last year, Wagners Holding shareholders might be miffed that they lost 20%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 46% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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. Take risks, for example - Wagners Holding has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Wagners Holding 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 AU exchanges.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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