Passive investing in an index fund is a good way to ensure that your returns match the overall market. While individual stocks can be big winners, many more fail to generate satisfactory returns. Unfortunately the 180 Degree Capital Corp. (NASDAQ: TURN) the share price has fallen 23% in twelve months. That contrasts slightly with the market’s 15% decline. At least the damage isn’t that bad if you look at the last three years, as the stock is down 14% in that time.
With this in mind, it’s worth looking at whether the company’s underlying fundamentals have been the driver of long-term performance, or whether there are any discrepancies.
Check out our latest analysis for 180 Degree Capital
180 Degree Capital was not profitable in the last twelve months, it is unlikely that we will see a strong correlation between its share price and its earnings per share (EPS). Entry is probably our next best option. When a company is not making profits, we generally expect to see good revenue growth. It is because it is difficult to be convinced that a company will be sustainable if the growth of income is insignificant, and it never has a profit.
In just one year 180 Degree Capital saw its revenue drop by 23%. That’s not what investors generally want to see. Shareholders have seen the stock price drop 23% in that time. That seems quite reasonable given the lack of profits and revenue growth. It is difficult to escape the conclusion that the buyers have to see either the growth in the track, the reduction of the costs, or both.
You can see how earnings and revenues have changed over time in the image below (click on the graph to see the exact values).
It is good to see that there has been significant insider buying in the last three months. It is a positive. That said, we think earnings and revenue growth trends are also more important factors to consider. Dive deeper into the earnings by checking out this interactive chart from 180 Degree Capital’s earnings, revenue and cash flow.
A different perspective
We regret to announce that 180 Degree Capital shareholders are down 23% for the year. Unfortunately, this is worse than the broader market’s decline of 15%. However, it could just be that the share price has been affected by the wider jitters of the market. It might be worth taking a look at the basics, if there is a good opportunity. Unfortunately, last year’s performance may indicate unresolved challenges, as it was worse than the annualized loss of 1.8% over the last half decade. We understand that Baron Rothschild said that investors should “buy when there is blood in the streets”, but we warn that investors should be sure to buy a high-quality business. It is always interesting to track long-term stock price performance. But to better understand 180 Degree Capital, we need to consider several other factors. For example, we discovered 3 warning signs for the capital of 180 degrees (1 is a bit concerning!) What you should be aware of before investing here.
180 Degree Capital isn’t the only stock insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buyouts, could be just the ticket.
Please note, the market returns quoted in this article reflect the weighted average market returns of stocks currently trading on US exchanges.
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This Simply Wall St article 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 into account your goals, or your financial situation. We aim to deliver focused long-term analysis driven by fundamental data. Note that our analysis can not factor in the latest announcements of companies sensitive to price or quality material. Simply Wall St has no position in any of the stocks mentioned.
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