Shareholders in Vericity (NASDAQ:VERY) have lost 50%, as stock drops 15% this past week

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Vericity, Inc. (NASDAQ:VERY) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 50% drop in the share price over that period. The more recent news is of little comfort, with the share price down 20% in a year. Shareholders have had an even rougher run lately, with the share price down 30% in the last 90 days.

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

Check out our latest analysis for Vericity

Vericity 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. 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, Vericity saw its revenue grow by 7.7% per year, compound. That's not a very high growth rate considering it doesn't make profits. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 15% during the period. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). After all, growing a business isn't easy, and the process will not always be smooth.

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Over the last year, Vericity shareholders took a loss of 20%. In contrast the market gained about 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 15% per annum loss investors have suffered over the last three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand Vericity better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Vericity (of which 2 don't sit too well with us!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.