Further weakness as Vestas Wind Systems (CPH:VWS) drops 3.8% this week, taking three-year losses to 36%

As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Vestas Wind Systems A/S (CPH:VWS) shareholders have had that experience, with the share price dropping 37% in three years, versus a market return of about 50%. Shareholders have had an even rougher run lately, with the share price down 11% in the last 90 days. Of course, this share price action may well have been influenced by the 10% decline in the broader market, throughout the period.

Since Vestas Wind Systems has shed kr.5.6b from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Vestas Wind Systems

Vestas Wind Systems isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last three years Vestas Wind Systems saw its revenue shrink by 0.2% per year. That's not what investors generally want to see. The stock has disappointed holders over the last three years, falling 11%, annualized. And with no profits, and weak revenue, are you surprised? Of course, sentiment could become too negative, and the company may actually be making progress to profitability.

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

Vestas Wind Systems is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Vestas Wind Systems shareholders gained a total return of 2.1% during the year. But that was short of the market average. On the bright side, the longer term returns (running at about 6% a year, over half a decade) look better. Maybe the share price is just taking a breather while the business executes on its growth strategy. You could get a better understanding of Vestas Wind Systems' growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like Vestas Wind Systems better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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