As any investor knows, not every swing hits the sweet spot. But really big losses can drag down your entire portfolio. So please take a moment to sympathize with long-term shareholders. American Public Education, Inc. (NASDAQ:APEI) stock has soared 85% in three years. That may, to say the least, raise serious doubts about the merits of your initial decision to buy the stock. Recent news that the stock price has fallen 59% in one year is not very reassuring. And the stock price continued to fall last week, dropping about 11%. In this scenario, we have shareholders at heart. This is a good reminder of the importance of diversification, and it’s worth bearing in mind that there’s more to life than money anyway.
Given the past week has been tough for shareholders, let’s examine the fundamentals and see what we can learn.
See our latest analysis on American public education
Considering that American Public Education didn’t make a profit in the last twelve months, we’ll focus on its revenue growth to get a quick look at its business development. Shareholders of unprofitable companies typically expect strong earnings growth. It’s hard to be confident that a company is sustainable when its revenue growth is modest and it doesn’t make any profits.
American Public Education grew its revenue at 28% per year over three years. This is faster than most pre-profit companies. So it’s really surprising at first glance that the share price has fallen 23% per year over the same period. It’s a good idea to take a close look at the balance sheet as well as the losses. After all, if your business doesn’t scale well, your revenue growth won’t be as great. Unless the balance sheet is strong, the company may have to raise capital.
The company’s earnings and revenue (long-term) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide for a business. So it makes a lot of sense to check how much profit analysts think American Public Education will earn in the future (free profit forecasts).
different perspective
Investors in U.S. public education have had a tough year, with a total loss of 59% versus 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. Unfortunately, last year’s performance ended on a down note, with shareholders facing a total annual loss of 13% over five years. Generally speaking, long-term stock price weakness can be a bad sign, but contrarian investors may want to research the stock in hopes of a turnaround. It’s always interesting to track stock performance over the long term. But to better understand American public education, we need to consider many other factors. For example, we discovered that One warning sign for American public education. What you need to know before investing here.
American Public Education isn’t the only stock that insiders are buying.So take a look at this free A list of growing companies with 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.
Valuation is complex, but we help make it simple.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.