Did Changing Sentiment Drive Astron's (ASX:ATR) Share Price Down By 30%?
In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the main game is to find enough winners to more than offset the losers At this point some shareholders may be questioning their investment in Astron Corporation Limited (ASX:ATR), since the last five years saw the share price fall 30%. Shareholders have had an even rougher run lately, with the share price down 10% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 30% in the same timeframe.
View our latest analysis for Astron
Astron isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over five years, Astron grew its revenue at 47% per year. That's well above most other pre-profit companies. Shareholders are no doubt disappointed with the loss of 6.9%, each year, in that time. So you might argue the Astron should get more credit for its rather impressive revenue growth over the period. If that's the case, now might be the smart time to take a close look at it.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free interactive report on Astron's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
While it's never nice to take a loss, Astron shareholders can take comfort that their trailing twelve month loss of 13% wasn't as bad as the market loss of around 20%. Given the total loss of 6.9% per year over five years, it seems returns have deteriorated in the last twelve months. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. 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. For example, we've discovered 4 warning signs for Astron (2 are concerning!) that you should be aware of before investing here.
Astron 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 AU exchanges.
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.
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