NeoGenomics (NASDAQ:NEO investor five-year losses grow to 68% as the stock sheds US$85m this past week

Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. For example the NeoGenomics, Inc. (NASDAQ:NEO) share price dropped 68% over five years. That's an unpleasant experience for long term holders. And some of the more recent buyers are probably worried, too, with the stock falling 41% in the last year. Shareholders have had an even rougher run lately, with the share price down 52% in the last 90 days.

Since NeoGenomics has shed US$85m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

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NeoGenomics 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last half decade, NeoGenomics saw its revenue increase by 9.7% per year. That's a fairly respectable growth rate. The share price, meanwhile, has fallen 11% compounded, over five years. It seems probably that the business has failed to live up to initial expectations. A pessimistic market can create opportunities.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for NeoGenomics in this interactive graph of future profit estimates .

A Different Perspective

While the broader market lost about 2.4% in the twelve months, NeoGenomics shareholders did even worse, losing 41%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that NeoGenomics is showing 2 warning signs in our investment analysis , you should know about...

Of course NeoGenomics 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 American exchanges.

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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.