A Look At Emerald Holding's (NYSE:EEX) Share Price Returns

Emerald Holding, Inc. (NYSE:EEX) shareholders will doubtless be very grateful to see the share price up 168% in the last quarter. But that is meagre solace in the face of the shocking decline over three years. To wit, the share price sky-dived 75% in that time. So it's about time shareholders saw some gains. The thing to think about is whether the business has really turned around.

See our latest analysis for Emerald Holding

Emerald Holding 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years Emerald Holding saw its revenue shrink by 11% per year. That is not a good result. Having said that the 21% annualized share price decline highlights the risk of investing in unprofitable companies. This business clearly needs to grow revenues if it is to perform as investors hope. Don't let a share price decline ruin your calm. You make better decisions when you're calm.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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. If you are thinking of buying or selling Emerald Holding stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Emerald Holding shareholders are down 52% for the year, but the broader market is up 23%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 20% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Emerald Holding , and understanding them should be part of your investment process.

Emerald Holding is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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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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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