Stock Analysis

loanDepot (NYSE:LDI) shareholders are up 20% this past week, but still in the red over the last year

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NYSE:LDI
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loanDepot, Inc. (NYSE:LDI) shareholders should be happy to see the share price up 20% in the last week. But that doesn't change the fact that the returns over the last year have been less than pleasing. After all, the share price is down 26% in the last year, significantly under-performing the market.

While the last year has been tough for loanDepot shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for loanDepot

SWOT Analysis for loanDepot

Strength
  • Debt is well covered by earnings and cashflows.
Weakness
  • Shareholders have been diluted in the past year.
Opportunity
  • Forecast to reduce losses next year.
  • Has sufficient cash runway for more than 3 years based on current free cash flows.
  • Good value based on P/S ratio compared to estimated Fair P/S ratio.
Threat
  • Not expected to become profitable over the next 3 years.

Given that loanDepot 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In just one year loanDepot saw its revenue fall by 73%. That looks like a train-wreck result to investors far and wide. No surprise, then, that the share price fell 26% over the year. It's always work digging deeper, but we'd probably need to see a strong balance sheet and bottom line improvements to get interested in this one.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NYSE:LDI Earnings and Revenue Growth May 23rd 2023

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 loanDepot stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While loanDepot shareholders are down 26% for the year, the market itself is up 5.6%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 6.0% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Case in point: We've spotted 4 warning signs for loanDepot you should be aware of.

loanDepot is not the only stock that insiders are buying. 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 American exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether loanDepot is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.