While not a mind-blowing move, it is good to see that the Acacia Research Corporation (NASDAQ:ACTG) share price has gained 28% in the last three months. But that is little comfort to those holding over the last half decade, sitting on a big loss. In that time the share price has delivered a rude shock to holders, who find themselves down 59% after a long stretch. So we're hesitant to put much weight behind the short term increase. We'd err towards caution given the long term under-performance.
See our latest analysis for Acacia Research
Because Acacia Research 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over half a decade Acacia Research reduced its trailing twelve month revenue by 25% for each year. That puts it in an unattractive cohort, to put it mildly. Arguably, the market has responded appropriately to this business performance by sending the share price down 9.7% (annualized) in the same time period. It's fair to say most investors don't like to invest in loss making companies with falling revenue. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on Acacia Research's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Acacia Research shareholders have received a total shareholder return of 47% over the last year. That certainly beats the loss of about 9.5% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Acacia Research better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Acacia Research (of which 1 is a bit concerning!) you should know about.
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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September 01, 2020 at 05:34PM
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Acacia Research's(NASDAQ:ACTG) Share Price Is Down 59% Over The Past Five Years. - Yahoo Finance
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