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In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term Ichor Holdings, Ltd. (NASDAQ:ICHR) shareholders, since the share price is down 31% in the last three years, falling well short of the market return of around 40%. The more recent news is of little comfort, with the share price down 23% in a year.
With the stock having lost 5.0% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
View our latest analysis for Ichor Holdings
Ichor Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
In the last three years Ichor Holdings saw its revenue shrink by 13% per year. That's not what investors generally want to see. The stock has disappointed holders over the last three years, falling 9%, annualized. And with no profits, and weak revenue, are you surprised? However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Ichor Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in Ichor Holdings had a tough year, with a total loss of 23%, against a market gain of about 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Ichor Holdings has 1 warning sign we think you should be aware of.