Stock Analysis

Smart Sand's (NASDAQ:SND) Stock Price Has Reduced 79% In The Past Three Years

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NasdaqGS:SND
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Smart Sand, Inc. (NASDAQ:SND) shareholders will doubtless be very grateful to see the share price up 47% in the last quarter. But that doesn't change the fact that the returns over the last three years have been stomach churning. Indeed, the share price is down a whopping 79% in the last three years. Arguably, the recent bounce is to be expected after such a bad drop. But the more important question is whether the underlying business can justify a higher price still.

See our latest analysis for Smart Sand

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Although the share price is down over three years, Smart Sand actually managed to grow EPS by 21% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Revenue is actually up 11% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating Smart Sand further; while we may be missing something on this analysis, there might also be an opportunity.

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
NasdaqGS:SND Earnings and Revenue Growth December 25th 2020

We know that Smart Sand has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Smart Sand will earn in the future (free profit forecasts).

A Different Perspective

The last twelve months weren't great for Smart Sand shares, which cost holders 24%, while the market was up about 23%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. However, the loss over the last year isn't as bad as the 21% per annum loss investors have suffered over the last three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand Smart Sand better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 6 warning signs for Smart Sand (of which 1 is potentially serious!) you should know about.

Of course Smart Sand may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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 Smart Sand?

Smart Sand, Inc., an integrated frac sand supply and services company, engages in the excavation, processing, and sale of sands or proppant for use in hydraulic fracturing operations in the oil and gas industry in the United States.

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Rewards

  • Earnings are forecast to grow 97.56% per year

Risks

  • Does not have a meaningful market cap ($86M)

  • Shareholders have been diluted in the past year

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