Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Matrix Service Company (NASDAQ:MTRX) have had an unfortunate run in the last three years. Unfortunately, they have held through a 60% decline in the share price in that time. And the share price decline continued over the last week, dropping some 11%.
Since Matrix Service has shed US$31m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Because Matrix Service 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
Over the last three years, Matrix Service's revenue dropped 16% per year. That means its revenue trend is very weak compared to other loss making companies. Arguably, the market has responded appropriately to this business performance by sending the share price down 17% (annualized) in the same time period. When revenue is dropping, and losses are still costing, and the share price sinking fast, it's fair to ask if something is remiss. It could be a while before the company repays long suffering shareholders with share price gains.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling Matrix Service stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Matrix Service shareholders are up 16% for the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 8% endured over half a decade. So this might be a sign the business has turned its fortunes around. Before spending more time on Matrix Service it might be wise to click here to see if insiders have been buying or selling shares.
We will like Matrix Service better if we see some big insider buys. While we wait, check out this free list of growing companies 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 US 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.
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