Yahoo Finance Loss-making Oak Street Health (NYSE:OSH) sheds a further US$743m, taking total shareholder losses to 72% over 1 year
It's not a secret that every investor will make bad investments, from time to time. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. We wouldn't blame Oak Street Health, Inc. (NYSE:OSH) shareholders if they were still in shock after the stock dropped like a lead balloon, down 72% in just one year. That'd be enough to make even the strongest stomachs churn. We wouldn't rush to judgement on Oak Street Health because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 41% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 18% in the same timeframe.
Since Oak Street Health has shed US$743m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
View our latest analysis for Oak Street Health
Given that Oak Street Health didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last twelve months, Oak Street Health increased its revenue by 69%. That's a strong result which is better than most other loss making companies. So the hefty 72% share price crash makes us think the company has somehow offended market participants. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
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're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We doubt Oak Street Health shareholders are happy with the loss of 72% over twelve months. That falls short of the market, which lost 21%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 41%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. For instance, we've identified 3 warning signs for Oak Street Health (1 is concerning) that you should be aware of.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
