If You Had Bought Continental Resources' (NYSE:CLR) Shares Three Years Ago You Would Be Down 50%

It is a pleasure to report that the Continental Resources, Inc. (NYSE:CLR) is up 39% in the last quarter. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 50% in the last three years, significantly under-performing the market.

View our latest analysis for Continental Resources

Continental Resources wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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 the last three years Continental Resources saw its revenue shrink by 5.4% per year. That's not what investors generally want to see. The share price decline of 14% 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 don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for Continental Resources in this interactive graph of future profit estimates.

A Different Perspective

Continental Resources shareholders gained a total return of 12% during the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 1.3% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Continental Resources better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Continental Resources , and understanding them should be part of your investment process.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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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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