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Light & Wonder, Inc. (NASDAQ:LNW) shareholders have seen the share price descend 21% over the month. But that doesn't change the fact that the returns over the last three years have been pleasing. To wit, the share price did better than an index fund, climbing 98% during that period.
In light of the stock dropping 14% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.
View our latest analysis for Light & Wonder
Because Light & Wonder 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Light & Wonder actually saw its revenue drop by 17% per year over three years. The revenue growth might be lacking but the share price has gained 26% each year in that time. Unless the company is going to make profits soon, we would be pretty cautious about it.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Light & Wonder will earn in the future (free profit forecasts).
A Different Perspective
We regret to report that Light & Wonder shareholders are down 47% for the year. Unfortunately, that's worse than the broader market decline of 20%. 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 1.4% 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. 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. For instance, we've identified 1 warning sign for Light & Wonder that you should be aware of.
Light & Wonder is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.