Unfortunately, investors in Commercial Vehicle Group (NASDAQ: CVGI ) lost 72% over the past three years
As an investor, mistakes are inevitable. But you want to avoid really big losses like the plague. So please take a moment to empathize with the company’s long-term shareholders Commercial Vehicle Group Corporation (NASDAQ: CVGI ) shares have plunged 72% in three years. To put it mildly, this could cast serious doubt on the merits of the original decision to buy the stock. Recent buyers have also had a hard time, with the number of buyers falling by 70% in the last year. Additionally, it was down 35% in about one quarter. This is no fun for the owner.
Now let’s look at the company’s fundamentals to see if long-term shareholder returns are in line with the performance of the underlying business.
Check out our latest analysis for Commercial Vehicle Group
in his paper Graham and Doddsville’s Super Investors Warren Buffett describes how stock prices do not always rationally reflect business value. One flawed but reasonable way to assess the change in sentiment about a company is to compare the earnings per share (EPS) with the share price.
Over the course of five years of share price growth, the Commercial Vehicle Group swung from losses to profits. We typically expect the share price to rise as a result. So given the share price decline, it’s worth checking some other metrics as well.
The company has maintained fairly healthy revenue over the past three years, so we suspect this explains the share price decline. There doesn’t appear to be any clear correlation between fundamental business metrics and stock prices. This could mean the stock was overvalued before, or it could represent an opportunity now.
You can see below how revenue and revenue have changed over time (discover the exact values by clicking on the image).
It’s worth noting that we saw a lot of insider buying last quarter, which we view as a positive. That said, we believe earnings and revenue growth trends are more important considerations. If you are considering buying or selling Commercial Vehicle Group shares, you should check this out free A report showing analyst profit forecasts.
Commercial Vehicle Group shareholders are down 70% this year, but the market itself is up 27%. Even though the share prices of quality stocks can sometimes fall, we like to see improvements in a business’s fundamental metrics before getting overly interested. Unfortunately, last year’s performance may indicate that the challenges are not yet resolved, as it was worse than the 11% annualized loss over the past five years. Generally speaking, long-term share price weakness can be a bad sign, although contrarian investors may want to research the stock in hopes of improvement. 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. For example, like risk. Every company has them, we found Warning Signal No. 6 for Commercial Vehicle Groups (2 of which can’t be ignored!) You should know.
