Freshpet (NASDAQ:FRPT investor three-year losses grow to 53% as the stock sheds US$115m this past week

If you love investing in stocks you're bound to buy some losers. But long term Freshpet, Inc. (NASDAQ:FRPT) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 53% drop in the share price over that period. Even worse, it's down 20% in about a month, which isn't fun at all.

Since Freshpet has shed US$115m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for Freshpet

Freshpet isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, Freshpet saw its revenue grow by 29% per year, compound. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 15% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

The graphic below depicts how earnings and revenue have changed over time (unveil 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. You can see what analysts are predicting for Freshpet in this interactive graph of future profit estimates.

A Different Perspective

Freshpet shareholders are up 1.4% for the year. But that was short of the market average. If we look back over five years, the returns are even better, coming in at 9% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Freshpet by clicking this link.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.