Market is not liking First Majestic Silver's (TSE:FR) earnings decline as stock retreats 8.0% this week

Investing in stocks comes with the risk that the share price will fall. Unfortunately, shareholders of First Majestic Silver Corp. (TSE:FR) have suffered share price declines over the last year. To wit the share price is down 52% in that time. However, the longer term returns haven't been so bad, with the stock down 16% in the last three years. Furthermore, it's down 46% in about a quarter. That's not much fun for holders.

If the past week is anything to go by, investor sentiment for First Majestic Silver isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Check out our latest analysis for First Majestic Silver

Given that First Majestic Silver only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year First Majestic Silver saw its revenue grow by 69%. That's well above most other pre-profit companies. Meanwhile, the share price slid 52%. This could mean hype has come out of the stock because the bottom line is concerning investors. Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for First Majestic Silver in this interactive graph of future profit estimates.

A Different Perspective

We regret to report that First Majestic Silver shareholders are down 52% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 3.0%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.7% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand First Majestic Silver better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for First Majestic Silver you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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

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