Recent 13% pullback isn't enough to hurt long-term ClearOne (NASDAQ:CLRO) shareholders, they're still up 3.4% over 3 years

ClearOne, Inc. +3.35%

ClearOne, Inc.

CLRO

0.93

+3.35%

Over the last month the ClearOne, Inc. (NASDAQ:CLRO) has been much stronger than before, rebounding by 77%. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 42% in the last three years, falling well short of the market return.

Since ClearOne has shed US$6.0m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

Check out our latest analysis for ClearOne

ClearOne 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years ClearOne saw its revenue shrink by 17% per year. That means its revenue trend is very weak compared to other loss making companies. On the face of it we'd posit the share price fall of 12% compound, over three years is well justified by the fundamental deterioration. It would probably be worth asking whether the company can fund itself to profitability. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqCM:CLRO Earnings and Revenue Growth April 3rd 2024

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. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between ClearOne's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for ClearOne shareholders, and that cash payout contributed to why its TSR of 3.4%, over the last 3 years, is better than the share price return.

A Different Perspective

It's good to see that ClearOne has rewarded shareholders with a total shareholder return of 123% in the last twelve months. That's better than the annualised return of 7% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with ClearOne (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. You probably do 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 American exchanges.

Every question you ask will be answered
Scan the QR code to contact us
whatsapp
Also you can contact us via