Australia markets closed
  • ALL ORDS

    7,324.90
    +36.10 (+0.50%)
     
  • AUD/USD

    0.7024
    -0.0101 (-1.41%)
     
  • ASX 200

    7,064.30
    +31.80 (+0.45%)
     
  • OIL

    87.15
    -4.94 (-5.36%)
     
  • GOLD

    1,794.40
    -21.10 (-1.16%)
     
  • BTC-AUD

    34,311.90
    -824.74 (-2.35%)
     
  • CMC Crypto 200

    571.32
    -19.44 (-3.29%)
     

Shareholders in Viad (NYSE:VVI) are in the red if they invested three years ago

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Viad Corp (NYSE:VVI) shareholders, since the share price is down 48% in the last three years, falling well short of the market return of around 54%. And over the last year the share price fell 23%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 15% in thirty days. However, we note the price may have been impacted by the broader market, which is down 7.5% in the same time period.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

See our latest analysis for Viad

Viad wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 three years Viad saw its revenue shrink by 51% per year. That's definitely a weaker result than most pre-profit companies report. On the face of it we'd posit the share price fall of 14% compound, over three years is well justified by the fundamental deterioration. It would probably be worth asking whether the company can fund itself to profitability. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.

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

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for Viad in this interactive graph of future profit estimates.

A Different Perspective

We regret to report that Viad shareholders are down 23% for the year. Unfortunately, that's worse than the broader market decline of 2.8%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. 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 Viad better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Viad (including 1 which makes us a bit uncomfortable) .

Viad is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting