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It's nice to see the iHeartMedia, Inc. (NASDAQ:IHRT) share price up 14% in a week. But the last three years have seen a terrible decline. The share price has sunk like a leaky ship, down 90% in that time. So it sure is nice to see a bit of an improvement. But the more important question is whether the underlying business can justify a higher price still. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
The recent uptick of 14% could be a positive sign of things to come, so let's take a look at historical fundamentals.
Because iHeartMedia 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last three years, iHeartMedia saw its revenue grow by 0.8% per year, compound. That's not a very high growth rate considering it doesn't make profits. Nonetheless, it's fair to say the rapidly declining share price (down 24%, compound, over three years) suggests the market is very disappointed with this level of growth. We generally don't try to 'catch the falling knife'. Before considering a purchase, take a look at the losses the company is racking up.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free report showing analyst forecasts should help you form a view on iHeartMedia
A Different Perspective
Investors in iHeartMedia had a tough year, with a total loss of 12%, against a market gain of about 9.8%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. However, the loss over the last year isn't as bad as the 13% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand iHeartMedia better, we need to consider many other factors. Take risks, for example - iHeartMedia has 3 warning signs (and 2 which are potentially serious) we think you should know about.