Investors ignore increasing losses at United Insurance Holdings (NASDAQ:ACIC) as stock jumps 41% this past week

While stock picking isn't easy, for those willing to persist and learn, it is possible to buy shares in great companies, and generate wonderful returns. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. For example, the United Insurance Holdings Corp. (NASDAQ:ACIC) share price is up a whopping 648% in the last 1 year, a handsome return in a single year. In more good news, the share price has risen 91% in thirty days. Unfortunately the longer term returns are not so good, with the stock falling 3.5% in the last three years. Anyone who held for that rewarding ride would probably be keen to talk about it.

The past week has proven to be lucrative for United Insurance Holdings investors, so let's see if fundamentals drove the company's one-year performance.

View our latest analysis for United Insurance Holdings

United Insurance Holdings isn't currently 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 make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

United Insurance Holdings actually shrunk its revenue over the last year, with a reduction of 25%. So it's very confusing to see that the share price gained a whopping 648%. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. While this gain looks like speculative buying to us, sometimes speculation pays off.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of United Insurance Holdings' earnings, revenue and cash flow.

A Different Perspective

We're pleased to report that United Insurance Holdings shareholders have received a total shareholder return of 648% over one year. That certainly beats the loss of about 10% per year over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand United Insurance Holdings better, we need to consider many other factors. Even so, be aware that United Insurance Holdings is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

United Insurance Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing 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.