It hasn't been the best quarter for Dada Nexus Limited (NASDAQ:DADA) shareholders, since the share price has fallen 15% in that time. Looking on the brighter side, the stock is actually up over twelve months. However, its return of 23% does fall short of the market return of, 39%.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
Dada Nexus 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Dada Nexus grew its revenue by 72% last year. That's well above most other pre-profit companies. Let's face it the 23% share price gain in that time is underwhelming compared to the growth. It could be that the market is missing what growth investor Matt Joass calls 'the hidden power of inflection points'. It's possible that the market is worried about the losses, or simply that the growth was already priced in. Or, this could be worth adding to your watchlist.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Dada Nexus is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We're happy to report that Dada Nexus are up 23% over the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 39%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 20% in the last three months. But a weak quarter certainly doesn't diminish the longer-term achievements of the 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. To that end, you should be aware of the 3 warning signs we've spotted with Dada Nexus .
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
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