Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in Ace Integrated Solutions Limited (NSE:ACEINTEG) have tasted that bitter downside in the last year, as the share price dropped 11%. That falls noticeably short of the market return of around -9.0%. We wouldn't rush to judgement on Ace Integrated Solutions because we don't have a long term history to look at. There was little comfort for shareholders in the last week as the price declined a further 9.3%.
With just ₹59,507,982 worth of revenue in twelve months, we don't think the market considers Ace Integrated Solutions to have proven its business plan. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. Investors will be hoping that Ace Integrated Solutions can make progress and gain better traction for the business, before it runs low on cash.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.
Ace Integrated Solutions had liabilities exceeding cash by ₹840,047 when it last reported in March 2019, according to our data. That puts it in the highest risk category, according to our analysis. But with the share price diving 11% in the last year, it's probably fair to say that some shareholders no longer believe the company will succeed. You can see in the image below, how Ace Integrated Solutions's cash levels have changed over time (click to see the values). You can see in the image below, how Ace Integrated Solutions's cash levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. You can click here to see if there are insiders selling.
A Different Perspective
Ace Integrated Solutions shareholders are down 11% for the year, even worse than the market loss of 9.0%. 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 9.3%, 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. Before spending more time on Ace Integrated Solutions it might be wise to click here to see if insiders have been buying or selling shares.
We will like Ace Integrated Solutions better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.