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Investors can approximate the average market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Neighbourly Pharmacy Inc. (TSE:NBLY) share price slid 17% over twelve months. That falls noticeably short of the market return of around 5.0%. Neighbourly Pharmacy hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. It's down 31% in about a quarter.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
Neighbourly Pharmacy 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last twelve months, Neighbourly Pharmacy increased its revenue by 45%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 17%. This implies the market was expecting better growth. However, that's in the past now, and it's the future that matters most.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on Neighbourly Pharmacy
A Different Perspective
While Neighbourly Pharmacy shareholders are down 17% for the year (even including dividends), the market itself is up 5.0%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Notably, the loss over the last year isn't as bad as the 31% drop in the last three months. So it seems like some holders have been dumping the stock of late - and that's not bullish. 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 Neighbourly Pharmacy that you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.