RISE Education Cayman (NASDAQ:REDU) Share Prices Have Dropped 77% In The Last Three Years

By
Simply Wall St
Published
May 23, 2021
NasdaqGM:REDU
Source: Shutterstock

RISE Education Cayman Ltd (NASDAQ:REDU) shareholders should be happy to see the share price up 12% in the last week. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 77% in that time. So it's about time shareholders saw some gains. Only time will tell if the company can sustain the turnaround.

See our latest analysis for RISE Education Cayman

Because RISE Education Cayman 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over three years, RISE Education Cayman grew revenue at 1.5% per year. Given it's losing money in pursuit of growth, we are not really impressed with that. But the share price crash at 21% per year does seem a bit harsh! We generally don't try to 'catch the falling knife'. Of course, revenue growth is nice but generally speaking the lower the profits, the riskier the business - and this business isn't making steady profits.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NasdaqGM:REDU Earnings and Revenue Growth May 24th 2021

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

A Different Perspective

RISE Education Cayman produced a TSR of 4.0% over the last year. It's always nice to make money but this return falls short of the market return which was about 48% for the year. On the bright side, that's certainly better than the yearly loss of about 21% endured over the last three years, implying that the company is doing better recently. We hope the turnaround in fortunes continues. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for RISE Education Cayman (2 are concerning) that you should be aware of.

We will like RISE Education Cayman 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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