Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for Cohu, Inc. (NASDAQ:COHU) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 58%. To make matters worse, the returns over three years have also been really disappointing (the share price is 50% lower than three years ago). Furthermore, it's down 51% in about a quarter. That's not much fun for holders.
After losing 11% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
Given that Cohu didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Cohu's revenue didn't grow at all in the last year. In fact, it fell 37%. That's not what investors generally want to see. The share price drop of 58% is understandable given the company doesn't have profits to boast of. Having said that, if growth is coming in the future, the stock may have better days ahead. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Cohu's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We regret to report that Cohu shareholders are down 58% for the year. Unfortunately, that's worse than the broader market decline of 2.0%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.7% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. If you would like to research Cohu in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
For those who like to find winning investments this free list of undervalued 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 American exchanges.
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This article by Simply Wall St 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.