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It hasn't been the best quarter for Newpark Resources, Inc. (NYSE:NR) shareholders, since the share price has fallen 15% in that time. On the other hand, over the last twelve months the stock has delivered rather impressive returns. During that period, the share price soared a full 157%. So we think most shareholders won't be too upset about the recent fall. The real question is whether the business is trending in the right direction.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Newpark Resources wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Newpark Resources actually shrunk its revenue over the last year, with a reduction of 23%. We're a little surprised to see the share price pop 157% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
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 to the business. You can see what analysts are predicting for Newpark Resources in this interactive graph of future profit estimates.
A Different Perspective
It's good to see that Newpark Resources has rewarded shareholders with a total shareholder return of 157% in the last twelve months. That certainly beats the loss of about 9% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. For instance, we've identified 2 warning signs for Newpark Resources (1 is potentially serious) that you should be aware of.
Newpark Resources is not the only stock that insiders are buying. 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 US exchanges.
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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