Further weakness as Porch Group (NASDAQ:PRCH) drops 23% this week, taking five-year losses to 43%

While not a mind-blowing move, it is good to see that the Porch Group, Inc. (NASDAQ:PRCH) share price has gained 11% in the last three months. But over the last half decade, the stock has not performed well. In fact, the share price is down 43%, which falls well short of the return you could get by buying an index fund.

Since Porch Group has shed US$198m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Given that Porch Group 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 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.

Over five years, Porch Group grew its revenue at 38% per year. That's better than most loss-making companies. The share price drop of 7% per year over five years would be considered let down. You could say that the market has been harsh, given the top line growth. If that's the case, now might be the smart time to take a close look at it.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time .

A Different Perspective

It's nice to see that Porch Group shareholders have received a total shareholder return of 28% over the last year. That certainly beats the loss of about 7% 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. 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 3 warning signs with Porch Group (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

Of course Porch Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.