Even though Gannett (NYSE:GCI) has lost US$133m market cap in last 7 days, shareholders are still up 139% over 1 year

Gannett Co., Inc. (NYSE:GCI) shareholders might be concerned after seeing the share price drop 16% in the last week. On the other hand, over the last twelve months the stock has delivered rather impressive returns. Indeed, the share price is up an impressive 139% in that time. So some might not be surprised to see the price retrace some. The real question is whether the business is trending in the right direction.

In light of the stock dropping 16% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

Check out our latest analysis for Gannett

Because Gannett made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Gannett actually shrunk its revenue over the last year, with a reduction of 6.1%. So we would not have expected the share price to rise 139%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

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

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So it makes a lot of sense to check out what analysts think Gannett will earn in the future (free profit forecasts).

A Different Perspective

It's good to see that Gannett has rewarded shareholders with a total shareholder return of 139% in the last twelve months. That certainly beats the loss of about 7% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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 Gannett that you should be aware of.

Gannett is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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.