Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for iCollege Limited (ASX:ICT) shareholders, the stock is a lot lower today than it was a year ago. The share price is down a hefty 53% in that time. iCollege may have better days ahead, of course; we've only looked at a one year period. The falls have accelerated recently, with the share price down 48% in the last three months. But this could be related to the weak market, which is down 28% in the same period.
iCollege wasn't profitable in the last twelve months, 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
iCollege grew its revenue by 128% over the last year. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 53%. This could mean hype has come out of the stock because the bottom line is concerning investors. Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on iCollege's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt iCollege shareholders are happy with the loss of 53% over twelve months. That falls short of the market, which lost 17%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 48% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Case in point: We've spotted 5 warning signs for iCollege you should be aware of, and 2 of them don't sit too well with us.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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