LendingClub (NYSE:LC shareholders incur further losses as stock declines 7.6% this week, taking one-year losses to 69%




  • In Business
  • 2022-12-09 15:23:47Z
  • By Simply Wall St.
 

Taking the occasional loss comes part and parcel with investing on the stock market. Anyone who held LendingClub Corporation (NYSE:LC) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 69%. However, the longer term returns haven't been so bad, with the stock down 27% in the last three years. The falls have accelerated recently, with the share price down 32% in the last three months.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

Check out our latest analysis for LendingClub

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 flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

LendingClub managed to increase earnings per share from a loss to a profit, over the last 12 months.

The result looks like a strong improvement to us, so we're surprised the market has sold down the shares. If the company can sustain the earnings growth, this might be an inflection point for the business, which would make right now a really interesting time to study it more closely.

The image below shows how EPS has 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. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

While the broader market lost about 18% in the twelve months, LendingClub shareholders did even worse, losing 69%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand LendingClub better, we need to consider many other factors. Take risks, for example - LendingClub has 2 warning signs (and 1 which can't be ignored) we think you should know about.

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 US 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.

Join A Paid User Research Session
You'll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

COMMENTS

More Related News

Danaos
Danaos' (NYSE:DAC) investors will be pleased with their incredible 908% return over the last three years

We think that it's fair to say that the possibility of finding fantastic multi-year winners is what motivates many...

Investing in Apollo Medical Holdings (NASDAQ:AMEH) five years ago would have delivered you a 89% gain
Investing in Apollo Medical Holdings (NASDAQ:AMEH) five years ago would have delivered you a 89% gain

When we invest, we're generally looking for stocks that outperform the market average. And the truth is, you can make...

Regis (NYSE:RGS) shareholders are up 18% this past week, but still in the red over the last three years
Regis (NYSE:RGS) shareholders are up 18% this past week, but still in the red over the last three years

It is doubtless a positive to see that the Regis Corporation ( NYSE:RGS ) share price has gained some 41% in the last...

Investors in Lingkaran Trans Kota Holdings Berhad (KLSE:LITRAK) have made a return of 26% over the past five years
Investors in Lingkaran Trans Kota Holdings Berhad (KLSE:LITRAK) have made a return of 26% over the past five years

Ideally, your overall portfolio should beat the market average. But even in a market-beating portfolio, some stocks...

Should You Be Adding Brambles (ASX:BXB) To Your Watchlist Today?
Should You Be Adding Brambles (ASX:BXB) To Your Watchlist Today?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business