Further weakness as Forward Air (NASDAQ:FWRD) drops 9.8% this week, taking three-year losses to 71%

While it may not be enough for some shareholders, we think it is good to see the Forward Air Corporation (NASDAQ:FWRD) share price up 21% in a single quarter. But that is meagre solace in the face of the shocking decline over three years. To wit, the share price sky-dived 71% in that time. So we're relieved for long term holders to see a bit of uplift. The thing to think about is whether the business has really turned around.

With the stock having lost 9.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

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Forward Air isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, Forward Air saw its revenue grow by 16% per year, compound. That's a pretty good rate of top-line growth. So it seems unlikely the 20% share price drop (each year) is entirely about the revenue. More likely, the market was spooked by the cost of that revenue. If you buy into companies that lose money then you always risk losing money yourself. Just don't lose the lesson.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

This free interactive report on Forward Air's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Investors in Forward Air had a tough year, with a total loss of 27%, against a market gain of about 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Forward Air better, we need to consider many other factors. Take risks, for example - Forward Air has 1 warning sign we think you should be aware of.

We will like Forward Air better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider 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.