Conduent (NASDAQ:CNDT) shareholders are up 6.8% this past week, but still in the red over the last five years

By
Simply Wall St
Published
March 17, 2022
NasdaqGS:CNDT
Source: Shutterstock

Long term investing works well, but it doesn't always work for each individual stock. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for those who held Conduent Incorporated (NASDAQ:CNDT) for five whole years - as the share price tanked 71%. And it's not just long term holders hurting, because the stock is down 32% in the last year. On the other hand the share price has bounced 6.8% over the last week.

While the stock has risen 6.8% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Conduent

Conduent 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 expect to see good 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 the last five years Conduent saw its revenue shrink by 11% per year. That's definitely a weaker result than most pre-profit companies report. So it's not altogether surprising to see the share price down 11% per year in the same time period. This kind of price performance makes us very wary, especially when combined with falling revenue. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NasdaqGS:CNDT Earnings and Revenue Growth March 17th 2022

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 we recommend checking out this free report showing consensus forecasts

A Different Perspective

Investors in Conduent had a tough year, with a total loss of 32%, against a market gain of about 1.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Conduent better, we need to consider many other factors. For example, we've discovered 1 warning sign for Conduent that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are 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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