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Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. For example, we sympathize with anyone who was caught holding Fugro N.V. (AMS:FUR) during the five years that saw its share price drop a whopping 82%. And we doubt long term believers are the only worried holders, since the stock price has declined 35% over the last twelve months. It's down 6.1% in the last seven days.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Check out our latest analysis for Fugro
Fugro isn't a profitable company, so 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. Shareholders of unprofitable companies usually expect strong 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 five years Fugro saw its revenue shrink by 12% per year. That puts it in an unattractive cohort, to put it mildly. So it's not that strange that the share price dropped 29% per year in that period. We don't think this is a particularly promising picture. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
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. So it makes a lot of sense to check out what analysts think Fugro will earn in the future (free profit forecasts).
A Different Perspective
Investors in Fugro had a tough year, with a total loss of 35%, against a market gain of about 5.9%. 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 28% 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. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.