The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. For example, the EverQuote, Inc. (NASDAQ:EVER) share price is down 11% in the last year. That’s well below the market return of 59%. Because EverQuote hasn’t been listed for many years, the market is still learning about how the business performs. In the last ninety days we’ve seen the share price slide 28%.
EverQuote isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
EverQuote grew its revenue by 39% over the last year. That’s definitely a respectable growth rate. Meanwhile, the share price is down 11% over twelve months, which is disappointing given the progress made. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
You can see below how earnings and revenue have changed over time (discover 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 EverQuote in this interactive graph of future profit estimates.
A Different Perspective
While EverQuote shareholders are down 11% for the year, the market itself is up 59%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. Notably, the loss over the last year isn’t as bad as the 28% drop in the last three months. So it seems like some holders have been dumping the stock of late – and that’s not bullish. It’s always interesting to track share price performance over the longer term.