Cooper-Standard Holdings Inc. (NYSE:CPS) shareholders might be concerned after seeing the share price drop 15% in the last quarter. But over three years, the returns would have left most investors smiling In the last three years the share price is up, 79%: better than the market.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

We've discovered 3 warning signs about Cooper-Standard Holdings. View them for free.

Cooper-Standard Holdings wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Cooper-Standard Holdings saw its revenue grow at 7.0% per year. That's not a very high growth rate considering it doesn't make profits. In that time the share price is up 21% per year, which is not unreasonable given the revenue growth. Ultimately, the important thing is whether the company is trending to profitability. In this sort of situation it can be worth putting the stock on your watchlist. If it can become profitable, then even moderate revenue growth could grow profits quickly.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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. If you are thinking of buying or selling Cooper-Standard Holdings stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Investors in Cooper-Standard Holdings had a tough year, with a total loss of 25%, against a market gain of about 6.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Cooper-Standard Holdings (1 is significant) that you should be aware of.

Cooper-Standard Holdings is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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

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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.