Yahoo Finance Further weakness as Smartsheet (NYSE:SMAR) drops 13% this week, taking one-year losses to 58%
Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of Smartsheet Inc. (NYSE:SMAR) have suffered share price declines over the last year. To wit the share price is down 58% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 13% in three years. On top of that, the share price is down 13% in the last week. But this could be related to the soft market, which is down about 6.9% in the same period.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
See our latest analysis for Smartsheet
Smartsheet 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 expect 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 twelve months, Smartsheet increased its revenue by 44%. That's definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 58% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Smartsheet stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Smartsheet shareholders are down 58% for the year, falling short of the market return. Meanwhile, the broader market slid about 23%, likely weighing on the stock. The three-year loss of 4% 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. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 4 warning signs for Smartsheet (1 is potentially serious) that you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
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