Kano Health (NYSE: CANO) shareholders should be pleased to see shares have risen 10% in the last month. But that doesn’t change the fact that the past year’s returns have been stomach-churning. Specifically, shares plummeted 78% at the time. So it’s not surprising to see a bit of a backlash. What matters is whether the company can turn things around in the long run.
With Cano Health losing $42 million in market value over the past seven days, let’s see if the long-term decline is driven by the business’s economics.
Check out our latest analysis for Cano Health
With Cano Health posting losses over the past twelve months, we think the market may be more focused on revenue and revenue growth, at least for now. Shareholders of unprofitable companies typically expect strong revenue growth. Some companies are willing to defer earnings to grow revenue faster, but in this case, one does expect good revenue growth.
Cano Health’s revenue grew 85% from last year. That’s an excellent result, better than most other loss-making companies. Therefore, a 78% share price plunge leads us to think that the company has offended market participants in some way. Something odd is definitely affecting the stock price; we dare the company to destroy value in some way. What is clear is that the market is not currently judging the company on its revenue growth. Of course, investors overreact when stressed, so the sell-off could be unusually severe.
The company’s revenue and earnings (over time) are shown in the graph below (click to see exact figures).
We like that insiders have been buying shares over the past twelve months. That being said, most consider earnings and revenue growth trends to be more meaningful guides for business.So we recommend checking this free A report showing consensus forecasts
We doubt Cano Health shareholders are happy with a 78% loss over a 12-month period. That was below the market’s 7.9% decline. That’s disappointing, but it’s worth remembering that the market-wide sell-off didn’t help. The share price has continued to fall in the last three months, down 68%, indicating a lack of enthusiasm among investors. Basically, most investors should be cautious about buying underperforming stocks unless the business itself improves significantly. I find it very interesting to look at long-term stock prices as a proxy for business performance. But to really gain insight, we need to consider other information as well. Such as risk.Every company has it, we found 3 Warning Signs of Cano Health (1 of which cannot be ignored!) You should know.
If You Like Buying Stocks With Management, Then You Might Like This free List of companies. (Hint: insiders have been buying them).
Note that the market returns quoted in this article reflect the market-weighted average return of stocks currently traded on U.S. exchanges.
What are the risks and opportunities Kano Health?
Cano Health, Inc. provides primary care medical services to its members in the United States and Puerto Rico.
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Trading at a 76.6% discount to our estimate of its fair value
Revenue expected to grow 55.28% annually
The share price has fluctuated significantly in the past 3 months
Shareholders have been diluted in the past year
Has cash runway for less than 1 year
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This article by Simply Wall St is general in nature. We use only an unbiased methodology to provide reviews based on historical data and analyst forecasts, 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 objectives or your financial situation. Our goal is to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no positions in any of the stocks mentioned.