Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Spare a thought for anyone who held Brookdale Senior Living Inc. (NYSE:BKD) for five whole years – as the share price tanked 78%. On top of that, the share price has dropped a further 10% in a month. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.
Brookdale Senior Living isn’t yet profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn’t yet make profits, we’d generally expect to see good 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 half decade, Brookdale Senior Living saw its revenue increase by 5.2% per year. That’s far from impressive given all the money it is losing. Nonetheless, it’s fair to say the rapidly declining share price (down 26%, compound, over five years) suggests the market is very disappointed with this level of growth. While we’re definitely wary of the stock, after that kind of performance, it could be an over-reaction. We’d recommend focussing any further research on the likelihood of profitability in the foreseeable future, given the muted revenue growth.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
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. So it makes a lot of sense to check out what analysts think Brookdale Senior Living will earn in the future (free profit forecasts)
A Different Perspective
It’s good to see that Brookdale Senior Living has rewarded shareholders with a total shareholder return of 6.4% in the last twelve months. Notably the long term annualised TSR loss of 26% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. The data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.