Fire & Flower Holdings Corp. (TSE:FAF) shareholders will doubtless be very grateful to see the share price up 61% in the last quarter. But that doesn't change the reality of under-performance over the last twelve months. After all, the share price is down 28% in the last year, significantly under-performing the market.
Because Fire & Flower Holdings made a loss in the last twelve months, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last twelve months, Fire & Flower Holdings increased its revenue by 189%. That's a strong result which is better than most other loss making companies. The share price drop of 28% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on Fire & Flower Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Fire & Flower Holdings shareholders are down 28% for the year, even worse than the market loss of 3.0%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. It's great to see a nice little 61% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. 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. For instance, we've identified 2 warning signs for Fire & Flower Holdings that you should be aware of.
Of course Fire & Flower Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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