OrthoPediatrics (NASDAQ:KIDS investor three-year losses grow to 59% as the stock sheds US$55m this past week

Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term OrthoPediatrics Corp. (NASDAQ:KIDS) shareholders. Sadly for them, the share price is down 59% in that time. More recently, the share price has dropped a further 17% in a month.

If the past week is anything to go by, investor sentiment for OrthoPediatrics isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for OrthoPediatrics

OrthoPediatrics 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. Shareholders of unprofitable companies usually desire 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, OrthoPediatrics saw its revenue grow by 22% per year, compound. That is faster than most 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. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on OrthoPediatrics' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

OrthoPediatrics shareholders are down 17% for the year, but the market itself is up 34%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 3 warning signs we've spotted with OrthoPediatrics .

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.