Imagine Owning Wellard (ASX:WLD) And Trying To Stomach The 80% Share Price Drop

Wellard Limited (ASX:WLD) shareholders should be happy to see the share price up 13% in the last week. But only the myopic could ignore the astounding decline over three years. The share price has sunk like a leaky ship, down 80% in that time. So it sure is nice to see a bit of an improvement. Only time will tell if the company can sustain the turnaround.

View our latest analysis for Wellard

Because Wellard made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.

Over the last three years, Wellard's revenue dropped 44% per year. That's definitely a weaker result than most pre-profit companies report. And as you might expect the share price has been weak too, dropping at a rate of 41% per year. We prefer leave it to clowns to try to catch falling knives, like this stock. It's worth remembering that investors call buying a steeply falling share price 'catching a falling knife' because it is a dangerous pass time.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

ASX:WLD Income Statement March 31st 2020
ASX:WLD Income Statement March 31st 2020

Take a more thorough look at Wellard's financial health with this free report on its balance sheet.

A Different Perspective

The last twelve months weren't great for Wellard shares, which performed worse than the market, costing holders 21%. The market shed around 15%, no doubt weighing on the stock price. Unfortunately, the longer term story isn't pretty, with investment losses running at 41% per year over three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand Wellard better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we've spotted with Wellard (including 2 which is don't sit too well with us) .

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 AU exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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