Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Nutritional High International Inc. (CNSX:EAT) have had an unfortunate run in the last three years. So they might be feeling emotional about the 68% share price collapse, in that time. And more recent buyers are having a tough time too, with a drop of 58% in the last year. Furthermore, it's down 39% in about a quarter. That's not much fun for holders.
Because Nutritional High International is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. 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.
In the last three years, Nutritional High International saw its revenue grow by 122% per year, compound. That is faster than most pre-profit companies. In contrast, the share price is down 32% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. When we see revenue growth, paired with a falling share price, we can't help wonder if there is an opportunity for those who are willing to dig deeper.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Nutritional High International stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Over the last year, Nutritional High International shareholders took a loss of 58%. In contrast the market gained about 12%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 32% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Before spending more time on Nutritional High International it might be wise to click here to see if insiders have been buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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