Bausch Health Companies Inc. (NYSE:BHC) shareholders should be happy to see the share price has increased 26% in the last month. But that’s small consolation in the face of three years of shocking declines. In fact, the stock price has fallen 72% over the past three years. So it’s reassuring for long-term holders to see a little bit of an uptick. What you need to think about is whether your business has really improved.
Bausch Health Companies has lost US$136m in value over the past 7 days, so let’s see if the long-term decline is driven by the company’s economic conditions.
Check out our latest analysis for Bausch Health Company.
Bausch Health Companies made a loss in the last twelve months, so we think the market is probably more focused on revenue and revenue growth, at least for now. Generally speaking, unprofitable companies are expected to have steady revenue growth every year. Some companies are willing to defer profitability in order to grow revenue faster, in which case they will expect good sales growth to make up for the revenue shortfall.
Bausch Health Companies grew its earnings at 2.4% per year over three years. Considering that it is not making a profit, the growth rate is not that high. But a 20% annual share price crash seems a bit harsh. We don’t usually try to “catch a falling knife.” Of course, increased profits are great, but generally speaking, the lower the profits, the more risky the business. And this business is not consistently profitable.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Profit and revenue growth
If you are thinking of buying or selling Bausch Health Companies stock, you could check out this free detailed report on its balance sheet.
different perspective
Bausch Health Companies offered a TSR of 11% over the last twelve months. However, its returns are below the market. But at least you can still make a profit. The TSR has been reduced by 10% per year over five years. Maybe business is stabilizing. I think it’s very interesting to look at stock price over the long term as an indicator of business performance. But to really gain insight, you need to consider other information as well. Still, be aware that Bausch Health Companies is showing 1 warning sign in our investment analysis .
Of course, Bausch Health Companies may not be the best stock to buy. So you might want to take a look at this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
