We think intelligent long term investing is the way to go. But that doesn’t mean long term investors can avoid big losses. To wit, the Clean Energy Fuels Corp. (NASDAQ:CLNE) share price managed to fall 57% over five long years. That’s an unpleasant experience for long term holders. And the share price decline continued over the last week, dropping some 7.5%. However, this move may have been influenced by the broader market, which fell 4.6% in that time.
View our latest analysis for Clean Energy Fuels
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Clean Energy Fuels became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.
Arguably, the revenue drop of 4.9% a year for half a decade suggests that the company can’t grow in the long term. This has probably encouraged some shareholders to sell down the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Clean Energy Fuels stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Clean Energy Fuels shareholders gained a total return of 9.9% during the year. But that was short of the market average. But at least that’s still a gain! Over five years the TSR has been a reduction of 10% per year, over five years. It could well be that the business is stabilizing. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Clean Energy Fuels (at least 1 which is significant) , and understanding them should be part of your investment process.
Clean Energy Fuels is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing 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 US exchanges.
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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