Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Anyone who held U.S. Silica Holdings, Inc. (NYSE:SLCA) for five years would be nursing their metaphorical wounds since the share price dropped 74% in that time. And it’s not just long term holders hurting, because the stock is down 61% in the last year. On top of that, the share price has dropped a further 31% in a month. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
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Because U.S. Silica Holdings is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn’t make profits, we’d generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over five years, U.S. Silica Holdings grew its revenue at 20% per year. That’s well above most other pre-profit companies. So it’s not at all clear to us why the share price sunk 24% throughout that time. It could be that the stock was over-hyped before. While there might be an opportunity here, you’d want to take a close look at the balance sheet strength.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling U.S. Silica Holdings stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Investors in U.S. Silica Holdings had a tough year, with a total loss of 61% (including dividends), against a market gain of about 4.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 23% over the last half decade. 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 is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
U.S. Silica Holdings 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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.