It is a pleasure to report that the Despegar.com, Corp. (NYSE:DESP) is up 51% in the last quarter. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 64%. So the improvement may be a real relief to some. Perhaps the company has turned over a new leaf.
Check out our latest analysis for Despegar.com
Because Despegar.com made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years Despegar.com saw its revenue shrink by 14% per year. That is not a good result. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 18% per year. Of course, it’s the future that will determine whether today’s price is a good one. We’d be pretty wary of this one until it makes a profit, because we don’t specialize in finding turnaround situations.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Despegar.com shareholders are down 14% for the year, but the broader market is up 27%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Unfortunately, the longer term story isn’t pretty, with investment losses running at 18% per year over three years. We’d need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It’s always interesting to track share price performance over the longer term. But to understand Despegar.com better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Despegar.com , and understanding them should be part of your investment process.
Of course Despegar.com may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. 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.
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