The Capstone Turbine (NASDAQ:CPST) Share Price Is Down 99% So Some Shareholders Are Very Salty

Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Imagine if you held Capstone Turbine Corporation (NASDAQ:CPST) for half a decade as the share price tanked 99%. And we doubt long term believers are the only worried holders, since the stock price has declined 86% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 57% in the last 90 days.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Check out our latest analysis for Capstone Turbine

Because Capstone Turbine 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. 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 five years Capstone Turbine saw its revenue shrink by 7.0% per year. While far from catastrophic that is not good. If a business loses money, you want it to grow, so no surprises that the share price has dropped 60% each year in that time. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn't grow revenue. Fear of becoming a 'bagholder' may be keeping people away from this stock.

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. This free report showing analyst forecasts should help you form a view on Capstone Turbine

A Different Perspective

We regret to report that Capstone Turbine shareholders are down 86% for the year. Unfortunately, that's worse than the broader market decline of 4.6%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 60% per year over five years. 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. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Capstone Turbine (of which 1 can't be ignored!) you should know about.

Capstone Turbine 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 US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.