While Nevro (NYSE: NVRO) shareholders have achieved 117% in 3 years, growing losses could now be on mind as stocks lose 5.8% this week

Nevro Corp. (NYSE: NVRO) Shareholders could understandably be very concerned about the share price falling 32% in the last quarter. On the other hand, the return over three years has been impressive. The share price has risen during this time and is now 117% higher than it was. For some, the recent pullback in stock prices wouldn’t be surprising after such a strong run. Only time will tell if there is still too much optimism currently reflected in the share price.

While the stock has fallen 5.8% this week, it’s worth focusing on the long term and seeing if historical stock returns have been driven by underlying fundamentals.

See our latest review for Nevro

Since Nevro has not made a profit in the past twelve months, we will focus on revenue growth to get a quick view of its business development. Generally speaking, companies with no profits are expected to increase their income every year, and at a good rate. This is because it is difficult to be sure that a business will be sustainable if the revenue growth is negligible and it never makes a profit.

Nevro’s revenue grew 0.09% each year over three years. It is not a very high growth rate since it does not make a profit. In contrast, the stock has climbed 29% per year during this period – an impressive result. We would need to take a closer look at revenue and profit trends to see if the improvements could justify this type of increase. It seems likely that the market is quite bullish on Nevro given that he is losing money.

The company’s revenue and profits (over time) are shown in the image below (click to see exact numbers).

NYSE: NVRO Profits and Revenue Growth January 1, 2022

It’s good to see that there have been some significant insider buys over the past three months. This is a positive point. That said, we believe earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Nevro stocks, you should check this out free report showing analysts’ earnings forecasts.

A different perspective

Nevro investors had a rough year, with a total loss of 53%, compared to a market gain of around 21%. Even good stock prices drop sometimes, but we want to see improvements in the fundamentals of a business, before we get too interested. On the plus side, long-term shareholders have made money, gaining 0.7% per year over half a decade. If fundamentals continue to point to sustainable long-term growth, the current sell-off could be an opportunity to consider. I find it very interesting to look at the stock price over the long term as an indicator of company performance. But to really gain insight, we have to take other information into account as well. For example, we have identified 2 warning signs for Nevro that you need to be aware of.

Nevro isn’t the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks that currently trade on the US stock exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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