Dawson Geophysical Company (NASDAQ:DWSN) shareholders should be happy to see the share price up 24% in the last month. But that is small recompense for the exasperating returns over three years. Indeed, the share price is down a tragic 55% in the last three years. So the improvement may be a real relief to some. After all, could be that the fall was overdone.
Because Dawson Geophysical 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last three years, Dawson Geophysical's revenue dropped 8.4% per year. That's not what investors generally want to see. The share price decline of 16% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Having said that, if growth is coming in the future, now may be the low ebb for the company. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at Dawson Geophysical's financial health with this free report on its balance sheet.
A Different Perspective
Investors in Dawson Geophysical had a tough year, with a total loss of 13%, against a market gain of about 25%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Dawson Geophysical better, we need to consider many other factors. For instance, we've identified 1 warning sign for Dawson Geophysical that you should be aware of.
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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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