SmileDirectClub (NASDAQ: SDC) shareholders are down 13% on their shares
Passive investing in an index fund is a good way to ensure that your own returns roughly match the overall market. But if you buy individual stocks, you can do better or worse than that. This downside risk was realized by SmileDirectClub, Inc. (NASDAQ: SDC) over the past year, with the stock price down 13%. That’s well below the market return of 44%. SmileDirectClub can have better days, of course; we only looked at a one-year period. The share price has fallen 24% in three months.
Check out our latest review for SmileDirectClub
SmileDirectClub has not been profitable over the past twelve months, we are unlikely to see a strong correlation between its share price and its earnings per share (EPS). Income is arguably our best option. Generally speaking, companies with no profits are expected to increase their income every year, and at a good rate. Indeed, the rapid growth in income can be easily extrapolated to the expected profits, often of considerable size.
SmileDirectClub’s revenue did not increase at all last year. In fact, it has fallen by 14%. It looks pretty dark, at a glance. The share price has languished in recent times, falling 13% in one year. Sounds reasonable enough given the lack of profit and revenue growth. We believe most cardholders should believe that revenue growth will improve, otherwise costs will decrease.
The company’s income and profits (over time) are shown in the image below (click to see exact numbers).
It’s good to see that there have been some significant insider buys over the past three months. It’s positive. That said, we believe earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling SmileDirectClub shares, you should check this out free report showing analysts’ earnings forecasts.
A different perspective
While SmileDirectClub shareholders are down 13% on the year, the market itself is up 44%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Notably, the loss over the past year is not as bad as the 24% drop over the past three months. So it looks like some holders have recently ditched their shares – and it’s not bullish. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Concrete example: we have spotted 1 warning sign for SmileDirectClub you must be aware.
If you like to buy stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on US stock exchanges.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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