Groupon (NASDAQ:GRPN) pulls back 6.7% this week, but still delivers shareholders stellar 31% CAGR over 3 years

Groupon, Inc. (NASDAQ:GRPN) shareholders might be concerned after seeing the share price drop 23% in the last quarter. But in three years the returns have been great. The share price marched upwards over that time, and is now 125% higher than it was. So the recent fall in the share price should be viewed in that context. If the business can perform well for years to come, then the recent drop could be an opportunity.

In light of the stock dropping 6.7% 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 three-year return.

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Given that Groupon 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Groupon saw its revenue shrink by 13% per year. So we wouldn't have expected the share price to gain 31% per year, but it has. It's fair to say shareholders are definitely counting on a bright future.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

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

A Different Perspective

It's good to see that Groupon has rewarded shareholders with a total shareholder return of 97% in the last twelve months. That certainly beats the loss of about 5% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. If you would like to research Groupon in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

But note: Groupon may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.