Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the Nicholas Financial, Inc. (NASDAQ:NICK) share price slid 25% over twelve months. That's well below the market decline of 18%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 4.5% in three years.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for Nicholas Financial
Nicholas Financial 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Nicholas Financial's revenue didn't grow at all in the last year. In fact, it fell 21%. That looks pretty grim, at a glance. The stock price has languished lately, falling 25% in a year. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.
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. It might be well worthwhile taking a look at our free report on Nicholas Financial's earnings, revenue and cash flow.
A Different Perspective
While the broader market lost about 18% in the twelve months, Nicholas Financial shareholders did even worse, losing 25%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 0.9%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Even so, be aware that Nicholas Financial is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...