Strong week for GreenFirst Forest Products (TSE:GFP) shareholders doesn't alleviate pain of three-year loss

It's nice to see the GreenFirst Forest Products Inc. (TSE:GFP) share price up 29% in a week. But only the myopic could ignore the astounding decline over three years. Indeed, the share price is down a whopping 75% in the last three years. So we're relieved for long term holders to see a bit of uplift. Only time will tell if the company can sustain the turnaround.

The recent uptick of 29% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for GreenFirst Forest Products

Because GreenFirst Forest Products made a loss in the last twelve months, 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 hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, GreenFirst Forest Products saw its revenue grow by 38% per year, compound. That is faster than most pre-profit companies. So on the face of it we're really surprised to see the share price down 21% a year in the same time period. The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. If the company is low on cash, it may have to raise capital soon.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

While the broader market gained around 17% in the last year, GreenFirst Forest Products shareholders lost 61%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 26%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 4 warning signs for GreenFirst Forest Products (3 don't sit too well with us!) that you should be aware of before investing here.

GreenFirst Forest Products is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.