Yahoo Finance Shareholders in Talos Energy (NYSE:TALO) have lost 52%, as stock drops 6.5% this past week
We think intelligent long term investing is the way to go. But no-one is immune from buying too high. To wit, the Talos Energy Inc. (NYSE:TALO) share price managed to fall 52% over five long years. That's an unpleasant experience for long term holders. And it's not just long term holders hurting, because the stock is down 23% in the last year. More recently, the share price has dropped a further 18% in a month.
After losing 6.5% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
See our latest analysis for Talos Energy
Given that Talos Energy didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.
Over five years, Talos Energy grew its revenue at 16% per year. That's better than most loss-making companies. In contrast, the share price is has averaged a loss of 9% per year - that's quite disappointing. This could mean high expectations have been tempered, potentially because investors are looking to the bottom line. If you think the company can keep up its revenue growth, you'd have to consider the possibility that there's an opportunity here.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at Talos Energy's financial health with this free report on its balance sheet.
A Different Perspective
While the broader market gained around 24% in the last year, Talos Energy shareholders lost 23%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% 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. 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 example, we've discovered 2 warning signs for Talos Energy (1 is a bit concerning!) that you should be aware of before investing here.
Of course Talos Energy may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
