Reflecting on WPX Energy's (NYSE:WPX) Share Price Returns Over The Last Three Years

The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of WPX Energy, Inc. (NYSE:WPX) have had an unfortunate run in the last three years. Sadly for them, the share price is down 60% in that time. The more recent news is of little comfort, with the share price down 56% in a year. The falls have accelerated recently, with the share price down 28% in the last three months.

See our latest analysis for WPX Energy

Because WPX Energy 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, WPX Energy saw its revenue grow by 30% per year, compound. That's well above most other pre-profit companies. In contrast, the share price is down 17% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. When we see revenue growth, paired with a falling share price, we can't help wonder if there is an opportunity for those who are willing to dig deeper.

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

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. You can see what analysts are predicting for WPX Energy in this interactive graph of future profit estimates.

A Different Perspective

WPX Energy shareholders are down 56% for the year, but the market itself is up 15%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5.4% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand WPX Energy better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for WPX Energy you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are 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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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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