It is doubtless a positive to see that the iHeartMedia, Inc. (NASDAQ:IHRT) share price has gained some 58% in the last three months. But that is minimal compensation for the share price under-performance over the last year. In fact the stock is down 22% in the last year, well below the market return.
Given that iHeartMedia didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year iHeartMedia saw its revenue fall by 18%. That looks pretty grim, at a glance. The stock price has languished lately, falling 22% in a year. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
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 iHeartMedia will earn in the future (free profit forecasts).
A Different Perspective
While iHeartMedia shareholders are down 22% for the year, the market itself is up 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 58% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 2 warning signs for iHeartMedia (1 is significant) that you should be aware of.
iHeartMedia 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 US exchanges.
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What are the risks and opportunities for iHeartMedia?
Trading at 67.2% below our estimate of its fair value
Earnings are forecast to grow 60.19% per year
Interest payments are not well covered by earnings
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. 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.
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