Organogenesis Holdings (NASDAQ:ORGO) pulls back 8.4% this week, but still delivers shareholders splendid 26% CAGR over 3 years
Organogenesis Holdings (NASDAQ:ORGO) shares have surged 101% over the past three years, delivering a 26% CAGR, despite a recent 8.4% pullback. The company has shown profitability in the past but reported a trailing twelve months loss. Revenue dropped by 0.02%. Insiders have made significant purchases recently. The total shareholder return over the last year is 38%, indicating potential business momentum. Investors should consider other metrics and warning signs before investing.
It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. For example, the Organogenesis Holdings Inc. (NASDAQ:ORGO) share price has soared 101% in the last three years. That sort of return is as solid as granite. It's also up 31% in about a month. We note that Organogenesis Holdings reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report.
Since the long term performance has been good but there's been a recent pullback of 8.4%, let's check if the fundamentals match the share price.
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In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
We know that Organogenesis Holdings has been profitable in the past. On the other hand, it reported a trailing twelve months loss, suggesting it isn't reliably profitable. So it might be better to look at other metrics to try to understand the share price.
The revenue drop of 0.02% is as underwhelming as some politicians. What's clear is that historic earnings and revenue aren't matching up with the share price action, very well. So you might have to dig deeper to get a grasp of the situation
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
It's nice to see that Organogenesis Holdings shareholders have received a total shareholder return of 38% over the last year. That's better than the annualised return of 2% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 2 warning signs for Organogenesis Holdings (1 doesn't sit too well with us!) that you should be aware of before investing here.
Organogenesis Holdings is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
