Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by Boxlight Corporation (NASDAQ:BOXL) shareholders over the last year, as the share price declined 35%. That falls noticeably short of the market return of around 2.0%. Boxlight may have better days ahead, of course; we've only looked at a one year period. The share price has dropped 39% in three months.
Because Boxlight is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Boxlight grew its revenue by 23% over the last year. We think that is pretty nice growth. Meanwhile, the share price is down 35% over twelve months, which is disappointing given the progress made. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Boxlight's financial health with this free report on its balance sheet.
A Different Perspective
While Boxlight shareholders are down 35% for the year, the market itself is up 2.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Notably, the loss over the last year isn't as bad as the 39% drop in the last three months. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
But note: Boxlight 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 US 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 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.