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Did Changing Sentiment Drive AB Science's (EPA:AB) Share Price Down A Worrying 62%?

Simply Wall St

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of AB Science S.A. (EPA:AB) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 62% drop in the share price over that period. Furthermore, it's down 12% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

View our latest analysis for AB Science

Because AB Science is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last three years, AB Science saw its revenue grow by 1.1% per year, compound. Given it's losing money in pursuit of growth, we are not really impressed with that. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 27% during the period. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term). Keep in mind it isn't unusual for good businesses to have a tough time or a couple of uninspiring years.

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

ENXTPA:AB Income Statement, October 21st 2019

If you are thinking of buying or selling AB Science stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market gained around 13% in the last year, AB Science shareholders lost 8.1%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 15% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. You could get a better understanding of AB Science's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

But note: AB Science may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FR 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 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. Thank you for reading.