Those Who Purchased Polar Power (NASDAQ:POLA) Shares Three Years Ago Have A 67% Loss To Show For It

It's nice to see the Polar Power, Inc. (NASDAQ:POLA) share price up 14% in a week. But over the last three years we've seen a quite serious decline. In that time, the share price dropped 67%. So it is really good to see an improvement. Perhaps the company has turned over a new leaf.

View 3 warning signs we detected for Polar Power

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During five years of share price growth, Polar Power moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. So given the share price is down it's worth checking some other metrics too.

Revenue is actually up 15% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Polar Power further; while we may be missing something on this analysis, there might also be an opportunity.

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

This free interactive report on Polar Power's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Polar Power shareholders are down 45% for the year, but the broader market is up 29%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 31% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. Before forming an opinion on Polar Power you might want to consider these 3 valuation metrics.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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