The five-year returns have been respectable for Rayonier Advanced Materials (NYSE:RYAM) shareholders despite underlying losses increasing

When you buy and hold a stock for the long term, you definitely want it to provide a positive return. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Rayonier Advanced Materials Inc. (NYSE:RYAM) share price is up 64% in the last five years, that's less than the market return. The last year has been disappointing, with the stock price down 16% in that time.

Since it's been a strong week for Rayonier Advanced Materials shareholders, let's have a look at trend of the longer term fundamentals.

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Rayonier Advanced Materials 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. When a company doesn't make profits, we'd generally hope 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 5 years Rayonier Advanced Materials saw its revenue grow at 3.5% per year. Put simply, that growth rate fails to impress. Like its revenue, its share price gained over the period. The increase of 10% per year probably reflects the modest revenue growth. If profitability is likely in the near term, then this might be one to add to your watchlist.

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

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. You can see what analysts are predicting for Rayonier Advanced Materials in this interactive graph of future profit estimates.

A Different Perspective

While the broader market gained around 21% in the last year, Rayonier Advanced Materials shareholders lost 16%. 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. On the bright side, long term shareholders have made money, with a gain of 10% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Case in point: We've spotted 1 warning sign for Rayonier Advanced Materials you should be aware of.

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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.