The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Mesa Laboratories, Inc. (NASDAQ:MLAB) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 67% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 30% in the last year. Furthermore, it's down 33% in about a quarter. That's not much fun for holders.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
View our latest analysis for Mesa Laboratories
Given that Mesa Laboratories only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last three years, Mesa Laboratories saw its revenue grow by 24% per year, compound. That's well above most other pre-profit companies. In contrast, the share price is down 19% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We know that Mesa Laboratories has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think Mesa Laboratories will earn in the future (free profit forecasts).
A Different Perspective
Mesa Laboratories shareholders are down 30% for the year (even including dividends), but the market itself is up 13%. 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 9% per year over five years. 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. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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.