Shareholders in INNOVATE (NYSE:VATE) have lost 82%, as stock drops 11% this past week

Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. Imagine if you held INNOVATE Corp. (NYSE:VATE) for half a decade as the share price tanked 82%. More recently, the share price has dropped a further 15% in a month. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

After losing 11% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Given that INNOVATE didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

Over five years, INNOVATE grew its revenue at 11% per year. That's a fairly respectable growth rate. So the stock price fall of 13% per year seems pretty steep. The market can be a harsh master when your company is losing money and revenue growth disappoints.

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

Take a more thorough look at INNOVATE's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that INNOVATE shareholders have received a total shareholder return of 24% over the last year. Notably the five-year annualised TSR loss of 13% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand INNOVATE better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with INNOVATE (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

We will like INNOVATE 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 American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.