The three-year underlying earnings growth at Altice USA (NYSE:ATUS) is promising, but the shareholders are still in the red over that time

It’s not possible to invest over long periods without making some bad investments. But really big losses can really drag down an overall portfolio. So spare a thought for the long term shareholders of Altice USA, Inc. (NYSE:ATUS); the share price is down a whopping 74% in the last three years. That would be a disturbing experience. And over the last year the share price fell 70%, so we doubt many shareholders are delighted. Unfortunately the share price momentum is still quite negative, with prices down 24% in thirty days.

Since Altice USA has shed US$632m from its value in the past 7 days, let’s see if the longer term decline has been driven by the business’ economics.

However if you’d rather see where the opportunities and risks are within ATUS’ industry, you can check out our analysis on the US Media industry.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the unfortunate three years of share price decline, Altice USA actually saw its earnings per share (EPS) improve by 60% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.

With revenue flat over three years, it seems unlikely that the share price is reflecting the top line. We’re not entirely sure why the share price is dropped, but it does seem likely investors have become less optimistic about the business.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Altice USA

A Different Perspective

We regret to report that Altice USA shareholders are down 70% for the year. Unfortunately, that’s worse than the broader market decline of 19%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we’ve spotted 5 warning signs for Altice USA (of which 3 make us uncomfortable!) you should know about.

Altice USA is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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