As every investor would know, you don’t hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a Revasum, Inc. (ASX: RVS) shareholder over the last year, since the stock price plummeted 76% in that time. That’d be enough to make even the strongest stomachs churn. We wouldn’t rush to judgment on Revasum because we don’t have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 45% in the last 90 days. Of course, this share price action may well have been influenced by the 23% decline in the broader market, throughout the period.
Check out our latest analysis for Revasum
Revasum isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Revasum’s revenue didn’t grow at all in the last year. In fact, it fell 25%. That’s not what investors generally want to see. The share price fall of 76% in a year tells the story. That’s a stern reminder that profitless companies need to grow the top line, at the very least. Of course, extreme share price falls can be an opportunity for those who are willing to really dig deeper to understand a high risk company like this.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
We doubt Revasum shareholders are happy with the loss of 76% over twelve months. That falls short of the market, which lost 10%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. The share price decline has continued throughout the most recent three months, down 45%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. 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. Even so, be aware that Revasum is showing 4 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable…
Of course Revasum may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
If you spot an error that warrants correction, please contact the editor at [email protected] 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.
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