Yahoo Finance LendingTree (NASDAQ:TREE) shareholders are still up 66% over 5 years despite pulling back 5.6% in the past week
LendingTree, Inc. (NASDAQ:TREE) shareholders might be concerned after seeing the share price drop 11% in the last month. But at least the stock is up over the last five years. In that time, it is up 66%, which isn't bad, but is below the market return of 122%. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 44% drop, in the last year.
While the stock has fallen 5.6% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
Check out our latest analysis for LendingTree
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During five years of share price growth, LendingTree actually saw its EPS drop 24% per year.
This means it's unlikely the market is judging the company based on earnings growth. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
In contrast revenue growth of 20% per year is probably viewed as evidence that LendingTree is growing, a real positive. In that case, the company may be sacrificing current earnings per share to drive growth.
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 like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling LendingTree stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
While the broader market gained around 36% in the last year, LendingTree shareholders lost 44%. 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. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand LendingTree better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for LendingTree you should be aware of.
LendingTree 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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