Further weakness as Liberty Latin America (NASDAQ:LILA) drops 6.4% this week, taking three-year losses to 51%

Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Liberty Latin America Ltd. (NASDAQ:LILA) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 51% drop in the share price over that period. And over the last year the share price fell 27%, so we doubt many shareholders are delighted. On top of that, the share price is down 6.4% in the last week. But this could be related to the soft market, which is down about 3.3% in the same period.

Since Liberty Latin America has shed US$158m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Liberty Latin America

Because Liberty Latin America 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 expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, Liberty Latin America grew revenue at 7.2% per year. Given it's losing money in pursuit of growth, we are not really impressed with that. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 15% during the period. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). After all, growing a business isn't easy, and the process will not always be smooth.

You can see below how earnings and revenue have changed over time (discover 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. 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 Liberty Latin America will earn in the future (free profit forecasts).

A Different Perspective

The last twelve months weren't great for Liberty Latin America shares, which performed worse than the market, costing holders 27%. Meanwhile, the broader market slid about 4.6%, likely weighing on the stock. The three-year loss of 15% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. 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 1 warning sign with Liberty Latin America , and understanding them should be part of your investment process.

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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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.