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Does IsoEnergy's (CVE:ISO) Share Price Gain of 20% Match Its Business Performance?

Simply Wall St

IsoEnergy Ltd. (CVE:ISO) shareholders might be concerned after seeing the share price drop 20% in the last month. But that doesn't change the fact that the returns over the last year have been pleasing. Looking at the full year, the company has easily bested an index fund by gaining 20%.

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View our latest analysis for IsoEnergy

IsoEnergy hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that IsoEnergy will discover or develop fossil fuel before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized).

When it reported in March 2019 IsoEnergy had minimal cash in excess of all liabilities consider its expenditure: just CA$3.2m to be specific. So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. Given how low on cash the it got, investors must really like its potential for the share price to be up 20% in the last year. You can see in the image below, how IsoEnergy's cash levels have changed over time (click to see the values).

TSXV:ISO Historical Debt, May 26th 2019

Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, many of the best investors like to check if insiders have been buying shares. It's often positive if so, assuming the buying is sustained and meaningful. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

It's nice to see that IsoEnergy shareholders have gained 20% over the last year. Unfortunately the share price is down 12% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. If you would like to research IsoEnergy in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

But note: IsoEnergy 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 CA 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 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. Thank you for reading.