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Those Who Purchased Cinedigm (NASDAQ:CIDM) Shares Five Years Ago Have A 96% Loss To Show For It

Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held Cinedigm Corp. (NASDAQ:CIDM) for five whole years - as the share price tanked 96%. Furthermore, it's down 13% in about a quarter. That's not much fun for holders.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

Check out our latest analysis for Cinedigm

Cinedigm 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

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In the last five years Cinedigm saw its revenue shrink by 17% per year. That's definitely a weaker result than most pre-profit companies report. So it's not that strange that the share price dropped 46% per year in that period. This kind of price performance makes us very wary, especially when combined with falling revenue. Of course, the poor performance could mean the market has been too severe selling down. That can happen.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

NasdaqGM:CIDM Income Statement, January 2nd 2020
NasdaqGM:CIDM Income Statement, January 2nd 2020

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Cinedigm shareholders are up 17% for the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 46% per year, over five years. So this might be a sign the business has turned its fortunes around. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.