It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So take a moment to sympathize with the long term shareholders of Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota S.A. (WSE:PBB), who have seen the share price tank a massive 97% over a three year period. That would be a disturbing experience. And over the last year the share price fell 60%, so we doubt many shareholders are delighted. Shareholders have had an even rougher run lately, with the share price down 63% in the last 90 days. 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.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
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Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota recorded just zł3,735,481 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota will significantly advance the business plan before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. 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. Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota has already given some investors a taste of the bitter losses that high risk investing can cause.
Our data indicates that Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota had zł47,017,326 more in total liabilities than it had cash, when it last reported in March 2019. That makes it extremely high risk, in our view. But with the share price diving 68% per year, over 3 years, it's probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
The last twelve months weren't great for Przedsiebiorstwo Przemyslu Betonów PREFABET - Biale Blota shares, which performed worse than the market, costing holders 60%. The market shed around 3.9%, no doubt weighing on the stock price. However, the loss over the last year isn't as bad as the 68% per annum loss investors have suffered over the last three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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 PL exchanges.
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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.