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Did Changing Sentiment Drive Enertronica Santerno's (BIT:ENT) Share Price Down A Worrying 59%?

Simply Wall St

Investing in stocks inevitably means buying into some companies that perform poorly. Long term Enertronica Santerno S.p.A. (BIT:ENT) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 59% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 32% lower in that time. The falls have accelerated recently, with the share price down 12% in the last three months.

Check out our latest analysis for Enertronica Santerno

Enertronica Santerno isn't a profitable company, so 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. 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.

In the last three years Enertronica Santerno saw its revenue shrink by 43% per year. That means its revenue trend is very weak compared to other loss making companies. Arguably, the market has responded appropriately to this business performance by sending the share price down 26% (annualized) in the same time period. Bagholders or 'baggies' are people who buy more of a stock as the price collapses. They are then left 'holding the bag' if the shares turn out to be worthless. It could be a while before the company repays long suffering shareholders with share price gains.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

BIT:ENT Income Statement, November 23rd 2019

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market gained around 25% in the last year, Enertronica Santerno shareholders lost 32%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 14% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

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 IT 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.

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.