The Vivint Smart Home, Inc. (NYSE:VVNT) share price has had a bad week, falling 14%. But that doesn't change the fact that the returns over the last year have been very strong. Like an eagle, the share price soared 103% in that time. So it is important to view the recent reduction in price through that lense. The real question is whether the business is trending in the right direction.
Vivint Smart Home isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 twelve months, Vivint Smart Home's revenue grew by 9.9%. That's not great considering the company is losing money. In contrast, the share price took off during the year, gaining 103%. The business will need a lot more growth to justify that increase. It's quite likely that the market is considering other factors, not just revenue growth.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
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. If you are thinking of buying or selling Vivint Smart Home stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Vivint Smart Home boasts a total shareholder return of 103% for the last year. The more recent returns haven't been as impressive as the longer term returns, coming in at just 18%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It's always interesting to track share price performance over the longer term. But to understand Vivint Smart Home better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Vivint Smart Home you should be aware of.
Vivint Smart Home 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.
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What are the risks and opportunities for Vivint Smart Home?
Earnings have grown 12.1% per year over the past 5 years
Earnings are forecast to decline by an average of 2.6% per year for the next 3 years
Negative shareholders equity
Shareholders have been diluted in the past year
Volatile share price over the past 3 months
Currently unprofitable and not forecast to become profitable over the next 3 years
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. 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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Vivint Smart Home
Vivint Smart Home, Inc., together with its subsidiaries, engages in the sale, installation, servicing, and monitoring of smart home and security systems primarily in the United States and Canada.
Fair value with worrying balance sheet.