From a brokerage analyst who sums up what we have ALL said the past 5 years:
Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Spare a thought for those who held Newpark Resources, Inc. (NYSE:NR) for five whole years - as the share price tanked 87%. And some of the more recent buyers are probably worried, too, with the stock falling 86% in the last year. The falls have accelerated recently, with the share price down 80% in the last three months.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Newpark Resources isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect 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.
In the last half decade, Newpark Resources saw its revenue increase by 1.1% per year. That's far from impressive given all the money it is losing. Nonetheless, it's fair to say the rapidly declining share price (down 34%, compound, over five years) suggests the market is very disappointed with this level of growth. We'd be pretty cautious about this one, although the sell-off may be too severe. We'd recommend focussing any further research on the likelihood of profitability in the foreseeable future, given the muted revenue.
While the broader market lost about 17% in the twelve months, Newpark Resources shareholders did even worse, losing 86%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 34% 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. It's always interesting to track share price performance over the longer term. But to understand Newpark Resources better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Newpark